The Effect of Tuition Fees on University Graduation

Abstract Against the background of ongoing governmental discussions on the introduction of tuition fees for public higher education, this paper examines the impact of tuition fees on university graduation rates among high-school completers. We analyze the introduction of fees in several German states in 2006-07 (around EUR 1,000 annually), using administrative microdata on all university graduates and a difference-in-differences approach. We observe a reduction of about 2.0 percentage points in university graduation rates among eligible school completers. This reduction in graduation is considerably smaller than the reduction in enrollment of 3.4 percentage points, suggesting that a substantial share of students deterred from enrolling by tuition fees would not have completed their degree even in the absence of fees. This highlights the importance of studying not only enrollment but also graduation, especially in contexts with high dropout rates.