Does more-expensive college serve as a disincentive for high school graduation?

Abstract

This paper attempts to gain insight into the impact college cost has on graduation rates in secondary education. Both high school and college degree earners have significantly higher wage prospects and quality of life than their non-high school graduate counterparts, in addition to option value that is inherent to both enrollment in high school and college. College affordability has also been shown to incentivize higher college enrollment. I hypothesize that in spite of associated economic positives, the cost of college is a salient factor in individuals' evaluations of the option value of a high schooldegree, thus leading some students on the margins to miscalculate the value of completing their high school degree and ultimately lowering the graduation rate within their state. Using an ordinary least squares regression, primarilyon ASEC and NCES data, I find mixed results with the exception that the hypothesized effect is much more likely to exist for two-year institutions.