University tuition fees and student effort

For the last few years, tertiary students in New Zealand have been able to study for their first full year without paying tuition fees. Anecdotal evidence on the impacts on student effort is mixed. Some lecturers believe that, with the financial pressures of a large student loan lessened somewhat, students are making the most of the opportunity to study. Others suggest that it has opened up the possibility of tertiary study to some students who wouldn't have otherwise. Yet others have reported increases in the number of 'ghost students', who enrol in classes but then do nothing at all (no attendance, no assessment, no nothing). My own experience is that there may have been a slight increase in ghosting, but I'd hesitate to extrapolate from my experience (even putting aside pandemic-related disruptions and simply concentrating on the semesters before coronavirus was even a word most people knew).

So, I've kept my eye out for any 'real' evidence of the impacts of eliminating tuition fees on student effort or academic performance. There hasn't been anything obvious from New Zealand so far, but I did see this 2018 article by Pilar Beneito, José Boscá and Javier Ferri (all University of Valencia), published in the journal Economics of Education Review (ungated earlier version here). Beneito et al. use data from students at the University of Valencia (UV), exploiting a law change where:

...in 2012, the Spanish government passed Law 14/2012, in a self-declared attempt to rationalise public expenditure by shifting a higher part of the costs of education onto the students. In the Spanish case, depending on the university and on the number of times the student has registered for the same module, tuition fees may be almost triple those charged before 2012.

So, this isn't investigating the case where tuition fees were removed, but instead investigating what happens when tuition fees are increased, substantially. However, the change didn't apply equally to all students. As Beneito et al. explain:

...UV students do not pay a fixed amount per year of enrolment. Instead, they register and pay tuition fees for a number of modules, and the price of each one is set according to the number of credits the module offers and the number of times the student has taken the module. Students are allowed to take the final examination of a module twice per paid registration (i.e., they have two ‘chances’ per payment). At the beginning of the course 2012-13, Law 14/2012 established a price increase that depends on the number of times the student has registered for a particular module before passing the corresponding exam. According to the law, university tuition fees should cover between 15% and 25% of the total cost of education for a first-time registration, between 30% and 40% for a second registration, between 65% and 75% if a student registers for a third time, and between 90% and 100% for fourth and subsequent registrations.

In other words, each time a student failed or did not complete a given module, the fee they would pay the next time they enrolled in that module would increase. Now, in theory that should provide a strong incentive for students to increase their effort and pass more modules sooner, and Beneito et al. provide a theoretical model that demonstrates that. Then, turning to the data from all students enrolled in business, economics, or medicine between 2010 and 2014 (and employing a difference-in-differences analysis that exploits the fact that a small number of students were exempt from the fees policy), they find:

...positive effects of the fee rise on UV students’ level of effort, reflected in a lower number of registrations required to pass a module and a higher probability of passing with the first registration. The results are more visible in the case of average-ability students, and also in economics and business than in medicine. Positive effects on grades are also evident, although in this case top students show larger estimated responses.

Specifically, they find that the number of module registrations per student dropped by around 0.2 in 2014, and was only statistically significant in that year (the final year of the analysis). The effect was larger for business and economics students than it was for medicine students. However, these results are weakened by the small and very selected nature of the control group - 'exempt' students include:

...students belonging to a particular category of large families (those with 5 or more siblings), students with an officially recognised degree of disability equal to or greater than 33%, and victims of terrorism (this last category fortunately provides very few observations).

I'm not convinced that control group necessarily provides for a robust analysis. However, taken at face value this provides some weak evidence that higher tuition fees increase student effort. By extrapolation, and reversing the direction of change, we might infer that students in New Zealand exert less effort in response to a lowering of tuition fees (to zero in their first year). However, we still really need to see some analysis of the New Zealand case.