Tuition-Setting Authority and Broad-Based Merit Aid: The Effect of Policy Intersection on Pricing Strategies

The notion of merit-aid is not a new development in higher education. Although previous researchers have demonstrated the impact of state-adopted merit-aid funding on student decision-making, fewer studies have examined institutional pricing responses to broad-based merit-aid policies. Using a generalized difference-in-difference approach, we extend previous empirical work by examining the impact of merit-aid on institutional pricing strategies while considering both the institution’s tuition-setting authority and the relative strength of the merit-aid program. In this study, we find that colleges and universities with the authority to set their own tuition increased their in-state tuition and fees following broad-based merit-aid policy adoption; however, institutions with state-controlled tuition-setting authority respond to broad-based merit-aid policies by lowering their in-state tuition and fees. Our findings suggest that the incentives and dynamics of each state’s policy environment are significant determinants of institutional responses to state-level policy adoptions.     

The Discounting Dilemma: Institutional Benefits,Unintended Consequences,and Principles for Reform

In recent years, concerns regarding runaway college tuition and student loan debt have risen to the forefront of the public consciousness, undermining confidence in the value of a college degree. Ironically, the very issue that is now causing such alarm—high tuition—has been a signature feature of the financial model intentionally employed by the vast majority of smaller private colleges and universities in the United States, including members of the Council for Christian Colleges & Universities (CCCU). In the “high-price–high-aid” model, postsecondary institutions mark up their “sticker price” (meaning the publicized cost of attending per year) and then offset the tuition hike with sizable discounts that take the form of institutional grants marketed as scholarships. This article examines the institutional benefits and unintended consequences of tuition discounting, giving special attention to effects within the evangelical Christian segment of the private sector of American higher education. The article concludes by offering a set of principles for reforming tuition pricing and financial aid practices at Christian colleges and universities.     

高等教育成本分担的国际比较——兼评中国高等教育学费标准的政策依据

中国现行高等教育学费标准的政策依据——学费占生均日常运行费用的25%是符合国际潮流的,但只有美国、印度、蒙古等极少数国家将高等教育的教学成本作为制定高等教育学费标准的政策依据,而且这一政策很少能在实践中执行下去。由于各国对相关成本的界定以及实际成本有诸多差异,在目前的高等教育成本核算制度下,我国的这一学费政策规定意义不大。     

Tuition Discounting to Optimize Enrollment and Revenue

As the borders between higher education systems continue to erode and competition for qualified students increases, many institutions are exploring variable pricing options, known in the USA as “tuition discounting.” The goal of tuition discounting is to use institutional funds to attract and retain desired students while maximizing net revenue to the institution. Recent changes in higher education funding and tuition structures in non‐US countries have led to interest in how to most effectively allocate institutional aid. This article outlines the basic concepts of tuition discounting, and shares insights for institutions that might be considering this option.     

A low-subsidy problem in public higher education

With an exogenous public subsidy and a break-even restriction on university net revenue, tuition discrimination supports a quasi-efficient departure from marginal-cost pricing. In contrast, when the legislature and university interact in their subsidy and tuition decisions, the public subsidy becomes endogenous. With an endogenous public subsidy, support by legislatures is affected by the same factors that influence tuition; this leads to a situation where higher tuition revenue is accompanied by a lower public subsidy. The welfare of students declines when this “low-subsidy” case develops. The university's ability to address this issue depends on its being able to commit to a tuition policy, and credible commitment appears consistent with existing institutional conditions.     

市场扭曲与高等教育学费定价

高等教育学费在一定程度上已经具有价格的某些功能,发挥着价格机制对教育资源的配置作用。但由于高等教育的巨大外部性,往往导致其市场扭曲,高等教育的学费定价不能完全按照等价交换原则来进行。高等教育收益的不可分割及其风险性、高等教育资源的稀缺及其垄断性、高等教育供需矛盾以及教育信息不对称等对学费定价有着不同的影响。规范政府和学校定价行为,改革政府学费规制是学费政策的现实选择。     

美国公立高校学费定价与收取制度研究

美国公立高校经过长期的发展,已经形成了比较成熟的学费定价与学费收取制度。在学费定价制度方面,有明确的定价基础、定价原则和定价机构,并且学费定价时所考虑的因素也比较全面。在学费收取制度方面,在实行按学分收费为主导的同时,还实行差别收费和其他灵活多样的学费收取制度。     

多视角下的高等教育学费标准确定模型

本文综合与学费定价相关的"高校-家庭-社会"三大主体及其涉及的地域、时间、专业、公平四大因素,多角度分析高等教育定价问题,建立了基于高等教育成本的学费优化模型、基于家庭收入的学费预测模型、基于社会效益的仿真定价模型.最后通过整合以上三模型,均衡高校、家庭、社会各方面利益,制定最优学费模型.     

RECENT RESEARCH ON THE ECONOMICS OF ATTENDING COLLEGE: Returns on Investment and Responsiveness to Price

This article examines recent research on the private returns to investment in baccalaureate and sub-baccalaureate postsecondary education, the social returns to investment in higher education, and student responsiveness to prices and subsidies (e.g., tuition and financial aid). The analysis focuses on the implications of recent research on the economics of attending college for policy and practice in a variety of specific areas such as enrollment management; the role of community colleges and other sub-baccalaureate institutions relative to welfare-to-work programs, tuition taxcredit legislation, and the value of investing in credits even without credentials; the development of effective high-tuition, high-aid, and other state and institutional pricing strategies; and the inequities in the distribution of access and choice in higher education that is evident in the widening gaps in participation rates of white and minority youth and higher- and lower-income students, as well as in the growing concentration of lower-income students at-and the flight of middle- and upper-income students from-community colleges.     

Tuition Discounting for Revenue Management

Over the past decade, institutionally-funded financial aid (or “tuition discounts”) have been the fastest-growing item within most public four-year college and university operating budgets. One explanation for this trend is due to the changing structure of public colleges’ revenue streams, as tuition and fees have replaced state appropriations as a viable and predictable source of funding. This analysis explores the extent to which expenditures on institutionally-funded financial aid generates additional revenue for public four-year colleges and universities. Using institutional data (n = 174) from 2002 to 2008, the analysis implements a generalized method of moments (GMM) technique and concludes that aid indeed can be leveraged for revenue generation. However, this relationship is only sustainable to a certain point. When unfunded tuition discount rates exceed approximately 13%, institutions may experience diminishing revenue returns to this financial aid investment.     

Risk-sharing and student loan policy: Consequences for students and institutions

This paper examines the potential costs and benefits associated with a risk-sharing policy imposed on all higher education institutions. Under such a program, institutions would be required to pay for a portion of the student loans among which their students defaulted. I examine the predicted institutional responses under a variety of possible penalties and institutional characteristics using a straightforward model of institutional behavior based on monopolistic competition. I also examine the impact of a risk-sharing program on overall economic efficiency by estimating the returns to scale for undergraduate enrollment (as well as other outputs) among each of ten educational sectors. My estimates suggest that a risk-sharing program would induce only a modest tuition increase, with considerable heterogeneity across sectors. Two different penalty structures are analyzed in the context of the model, and alternative institutional responses such as tuition discounting and credit rating students are discussed.     

The impact of guaranteed tuition policies on postsecondary tuition levels: A difference-in-difference approach

This study considers the impact of state-level guaranteed tuition programs on postsecondary tuition levels. The analytic framework argues that state-level laws requiring flat tuition rates for four years contain inflationary risk, which encourages institutions to set tuition higher than they otherwise would with annual adjustments. To empirically test this idea, this study uses a national panel dataset and a quasi-experimental difference-in-difference methodological approach, with Illinois’ Truth-in-Tuition law serving as the treatment condition. On average, institutions subject to this law increased annual tuition by approximately 26–30% and aggregate four-year tuition by approximately 6–7% in excess of the amount predicted by the trend for institutions not subject to the law. These findings are robust to multiple alternative specifications and support the idea that state-level guaranteed tuition programs encourage large institutional tuition increases. Implications of these findings for state policymakers, higher education institutional leaders, and college-age students and their families are also discussed.     

Exploring regional and institutional factors of international students' dropout: The South Korea case

With an increasing number of international students in South Korea, the issue of retaining these students and reducing their dropout rates has become important. This study explores the multilevel factors that affect the institutional dropout rate among international students in Korea. The research questions are as follows: (a) to what extent do international students drop out from undergraduate or short‐term programmes in Korean universities?; (b) what are the regional and institutional factors that determine international students' dropout rates? This study uses the panel data on educational institutions as found in the Higher Education in Korea report, which has been updated annually by the Ministry of Education since 2013. According to the pooled ordinary least square and panel analyses, the results indicate that a range of institutional factors (such as type, size, tuition and research performance of academics) and regional factors (such as regional gross domestic product, inflation and the numbers of foreigners in the region) are all associated with the dropout rates of international students. This study suggests that we need to consider various factors to improve the international students' learning experiences both inside and outside of the campus.     

高等学校收费水准的决定及其相关思考——基于规制经济学的视角

本文尝试运用规制经济学中的收费理论来讨论如何合理地确定高等学校的收费水准。首先分析了确定高校收费水准时应当遵循的六大管理目标,在此基础上讨论了四种可能的高校收费水准的决定方式,最后指出,在高等学校中,只能采取以公正报酬率计算方式为主的平均成本定价策略,同时辅之以混合型定价方式。此外,高校与政府之间应当加强相互信赖和信息公开。     

Did the Recession Impact Student Success? Relationships of Finances,Staffing and Institutional Type on Retention

Economic recessions impact higher education institutions in complex ways. Several analyses have examined the influence of the 2007–2009 recession on tuition, enrollments, revenues, and expenditures, but the connection of these resource allocation patterns to a student success outcome—namely, retention—is limited. This study examined relationships among institutional expenditures, tuition, and staffing patterns on first-year retention rates at private and public institutions in 2007, 2009 and 2011: before, during, and after the economic recession. Private and public institutions increased tuition during this time period and increased expenditures. Expenditures most directly educating students (i.e. instruction) and institutional selectivity were positively associated with retention. However, public and private institutions differed in how they allocated their expenditures. That the findings correspond with past research investigating relationships between resource allocation and retention illustrate principles of the resource dependency theory (Pfeffer and Salancik 1978): institutions impacted by external economic changes, adjust revenues, staffing, and expenditures during economic changes.     

Indexing tuition to cost of education: The impact on students and institutions

This study examines an emerging trend in state higher education finance policy: the use of an index to establish tuition and fee levels at public institutions. Based on a national survey of tuition-setting policies, this study documents the increasing use of an indexing formula to determine tuition levels. Factors encouraging this trend are examined, and questions that must be addressed by state and institutional policymakers in adopting such a formula are discussed. Policy implications for states and institutions are also considered.     

大学学费定价行为分析——基于尼斯坎南混合官僚模型的研究

生产准公共产品、关联品和体验品的大学,在组织性质上不同于生产私人产品、非关联品和搜寻品的企业。适合企业的边际成本定价机制完全不同于具有混合型官僚组织特性的大学定价模型。学费政策的制定要综合考虑不同类型高等院校学费形成机制的差异。     

基于公平和效率原则的高校学费评价模型

通过对大量相关数据的分析,基于公平、效率两大原则,建立了高等院校学费标准的数学模型,然后根据该模型对七所综合性公立大学的学费标准进行分析和综合评价,最后给相关部门提出一些意见和建议.     

The end of free college in England: Implications for enrolments,equity, and quality

Despite increasing financial pressures on higher education systems throughout the world, many governments remain resolutely opposed to the introduction of tuition fees, and some countries and states where tuition fees have been long established are now reconsidering free higher education. This paper examines the consequences of charging tuition fees on university enrolments, equity, and proxies for institutional quality. To do so, we study the English higher education system which has, in just two decades, moved from a free college system to one in which tuition fees are among the highest in the world. Our findings suggest that England's shift has resulted in increased funding per head and rising enrolments, with no apparent widening of the participation gap between advantaged and disadvantaged students. The role of fees is moderated by other key features of higher education finance which may differ across countries: in contrast to other systems with high tuition fees, the English system is distinct in that its income-contingent loan system ensures that no tuition fees are paid upfront, and provides students with comparatively generous assistance for living expenses. Still, the English experience provides an instructive case for other countries considering implementing or abolishing tuition fees.     

低收费政策能改善教育公平和社会福利吗?--兼论高等教育不同收费政策的效应

本文探讨不同收费政策对教育公平和社会福利的影响。一直以来,理论界认为提高缴费标准,会损害教育公平和社会福利。本文运用统计原理,分析了高等教育缴费标准与失学概率间的理论关系,并指出低收费政策和高收费政策,对于改善教育公平的比较效应,是随不同情况而改变的。进一步的实证分析表明,在当前贫富悬殊较为严重的情况下,低收费政策并不能明显改善低收入阶层的教育机会和社会福利,相反,高收费高资助政策的效应要更加显著。