An empirical examination of the Bennett hypothesis in law school prices

Abstract

Whether colleges increase tuition in response to increased federal student loan limits (the Bennett Hypothesis) has been a topic of debate in the higher education community for decades, yet most studies have been based on small increases to Pell Grant or undergraduate student loan limits. In this paper, I leverage a large increase in graduate student lending limits that took place in 2006 followed by an expansion of federal income-driven repayment programs to examine whether law schools responded by raising tuition and whether student debt levels also increased. Using data from 2001 to 2015 across public and private law schools and both interrupted time series and difference-in-differences analytical techniques, I found rather modest relationships across both public and private nonprofit law schools. I conclude with some possible explanations for the lack of strong empirical support for the Bennett Hypothesis.