Influences on the Intention to Enter Higher Education: The Importance of Expected Returns

Research points to several determinants of the private demand for higher education, which include individual, social, economic, and institutional variables. Of these variables, economic factors are considered to be highly relevant, especially in the current financial crisis. The paper investigates the link between expected rates of return to higher education and the intention of secondary education graduates to pursue university studies. The effect of additional variables influencing the choice of higher education (ability, gender, socioeconomic status [SES], type of secondary school, area of residence) is also examined. The findings show a significant link between the perceived rates of return and the intention of secondary school graduates to enter tertiary education. With the exception of residence, all independent variables are strong determinants of the intention to enter higher education. The paper also points to the considerable effect of the financial crisis on students' expectations in that respondents reported lower perceived rates of return compared to previous estimates in the same country. The implications of the findings for higher education policy are discussed.