This paper studies whether university tuition fees affect high school students’ intention to acquire a university degree and whether tuition fees influence the actual number of university graduates in Germany. Moreover, it analyses whether individuals from low income households are more affected by the introduction of tuition fees than those from richer families. Since tuition fees lower the net present value of studying, the introduction of tuition fees is expected to impact on the career plans of high school students. If individuals are subject to the same loan market constraints and have the same endowments, individuals should make similar decisions regarding their educational plans. However, differences in financial assets and disparities in access to the loan market predict varying effects of tuition fees, and individuals from low income households might be more likely to be deterred from studying. Hence, the introduction of tuition fees might increase income disparities in society. Overall, we find that the introduction and subsequent abolishment of university tuition fees in Germany influence young people’s educational aspirations and impact on the number of university graduates. The empirical findings suggest that even relative low levels of tuition fees of around 1,000 euros per year are likely to deter students from lower socio-economic backgrounds from studying and might therefore contribute to increasing educational and income inequalities in society.
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