One point about the current debate is whether a model of human capital investment where students are making forward looking choices on the basis of achieving a return is sufficient to capture the complexity of their decision. A number of points below would be interesting to examine further:
As Kevin pointed out, it is quite possible that students may give too much weight to current market conditions when evaluating the decision to participate in college and course choice. In general, we dont know enough about how irrelevant factors enter in to course choice. To what extent are course choices driven by insufficient information, focusing illusions, hyperbolic time preferences, peer effects and other potential sources of "sub-optimal" decision making? Would it matter much from a welfare perspective if it was shown that all of the above were the real drivers of course choice?
Related to this, the extent to which features of the higher education system create unnceccessary form-filling and confusion should be looked at. Martin blogged before about a paper by Dynarski and Scott-Clayton that examined the potential for simplifying student aid formulas (see below). There is a large amount of evidence from the pensions literature (e.g. the Save More Tomorrow Work) that cognitive features of pension and savings options can have strong effects on decision making in that domain. If fees were to return in any form, it would be extremely important to take this literature in to account and to ensure that any complexity would not cause a distortion (though it may already be causing a distortion!)
http://ksgnotes1.harvard.edu/research/wpaper.NSF/rwp/RWP07-014
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