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ERIC Number: EJ1064687
Record Type: Journal
Publication Date: 2013-Jun
Pages: 34
Abstractor: As Provided
Reference Count: 59
ISSN: EISSN-1941-3432
Determining a Relationship between Higher Education Financial Position and Tuition Discount Rates
Browning, Julianna
Research in Higher Education Journal, v20 Jun 2013
Institutions have increased the practice of tuition discounting, that is, the strategic use of price discrimination. During the past 30 years, both the average percent discount given to students and the proportion of students receiving tuition breaks have increased. As this practice has increased, there are financial determinants and implications that must be addressed. The purpose of this study was to conduct a thorough investigation of one of the issues embedded within tuition discounting practices: the relationship between an institution's overall financial position and its price discrimination practices. The five component ratios of the financial vulnerability index (FVI)--debt ratio, revenue concentration index, surplus margin ratio, administrative costs ratio, and size ratio--served as a proxy for institutional financial position. Ordinary least-squares regression was used to test the data. There were two main findings. First, institutional financial position had a relationship to tuition discount rates for stable institutions (FVI < 0.10). As the FVI decreased for stable institutions, tuition discount rates increased, showing that institutions with financial resources used these resources to create a class that would further their mission, increase prestige, or use a combination of the two. Second, institutional financial position had a relationship to tuition discount rates for unstable institutions (FVI > 0.20). As the FVI increased for unstable institutions, tuition discount rates increased, indicating that institutions used their current resources as an investment in the future of the institution.
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Publication Type: Journal Articles; Reports - Research
Education Level: Higher Education; Postsecondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A