With escalating tuitions, the return to college quality remains an important consideration for students deciding whether to spend more money for a higher quality college education. This paper examines how students that transfer credit for an introductory-level course perform in a subsequent intermediate-level course. Using rich administrative data we estimate how college quality affects student performance, holding constant many observable student characteristics.
Students taking introductory courses at higher quality institutions earn higher grades in their intermediate courses than students attending lower quality institutions. This difference is small, but statistically significant. A back of the envelope calculation suggests that, for the average student, the benefit from attending a higher quality institution is more than worth the higher tuition.