Abstract
Recent cuts in public higher education spending have often been matched by tuition increases. This may result in a decline in the number of college graduates that a state produces. The secondary effect might be that personal income and personal income tax receipts decline. Utilizing a net present value model, we quantify these results using New York State data. Furthermore, we utilize sensitivity analysis to ensure the robustness of the model. Finding that potential revenue losses quickly dwarf the short-run savings, we advocate a longer-term analysis of budget cuts that are accompanied by tuition increases.
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