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ERIC Number: ED533324
Record Type: Non-Journal
Publication Date: 2006-Sep
Pages: 31
Abstractor: As Provided
Reference Count: 18
ISBN: N/A
ISSN: N/A
Money Changes Everything: Funding Shocks and Optimal Admissions and Financial Aid Policies in Higher Education
Nagler, Matthew G.
Cornell Higher Education Research Institute
The paper examines the effect of a shock to university funding on tuition net of financial aid, admissions selectivity, and enrollment levels chosen by an optimizing university. Whereas a positive shock, such as a major donation, results in lower net tuition and greater selectivity with respect to all students, its effect on enrollment may not be uniform. Student categories given little weight in the university's utility function may be treated as "inferior goods," that is, their enrollment may be decreased in the face of a positive shock, while other student categories see enrollments increased. Such students are charged net tuition well above their marginal cost of enrollment and play primarily a revenue- rather than prestige-generating role for the university. Inferences are drawn from the analytical framework concerning the effect on tuition levels of an increase in federal direct-to-student aid, permitting a new perspective on evidence relating to the Bennett hypothesis. (Contains 17 footnotes.)
Cornell Higher Education Research Institute. ILR-Cornell University 273 Ives Hall, Ithaca, NY 14853. Tel: 607-255-4424; Web site: http://www.ilr.cornell.edu/cheri
Publication Type: Reports - Research
Education Level: Higher Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: Cornell Higher Education Research Institute (CHERI)