Working Papers

Through an empirically-disciplined human capital model, we demonstrate that the value of college varies dramatically across US high school completers. Roughly 40 percent place no value on the option to attend--despite the large public tuition subsidy. By contrast, a fourth of all attendees would enroll even absent the subsidy. The magnitude and pattern of variation suggests substantial potential for policy improvement: We show that simply redirecting the subsidy from individuals who always enroll towards a stock index fund for those who never enroll increases ex-ante welfare by 1 percent while preserving both enrollment and budget neutrality.