Does State Financial Aid Affect Institutional Aid? An Analysis of the Role of State Policy on Postsecondary Institutional Pricing Strategies

27 Pages Posted: 19 Jul 2010

See all articles by Bradley R. Curs

Bradley R. Curs

University of Missouri

Luciana Dar

University of California, Riverside

Date Written: July 16, 2010

Abstract

This study investigates whether higher education institutions alter their pricing strategies due to changes state-based financial aid generosity. Using fixed effects and instrumental variables estimation strategies with an institutional-level panel dataset for the years 2002-2008 we estimate whether institutions adjust net-tuition and fees, list tuition and fees, and average institutional financial aid awards as their home states alter their levels of state-based financial aid programs. Our findings show that public institutions’ pricing strategies are reinforcing state policies, primarily through downward adjustments in tuition levels. Further, we find that public institutions in states with weak higher education governance structures lower their net-price in response to increased state financial aid. In contrast, private institutions net-price is unresponsive to state financial aid award levels, although we find evidence that they lower institutional aid awards in response.

Keywords: higher education, tuition-setting, financial aid, governance

JEL Classification: I2, H7

Suggested Citation

Curs, Bradley R. and Dar, Luciana, Does State Financial Aid Affect Institutional Aid? An Analysis of the Role of State Policy on Postsecondary Institutional Pricing Strategies (July 16, 2010). Available at SSRN: https://ssrn.com/abstract=1641489 or http://dx.doi.org/10.2139/ssrn.1641489

Bradley R. Curs (Contact Author)

University of Missouri ( email )

Educational Leadership and Policy Analysis
202 Hill Hall
Columbia, MO 65211
United States
573-882-2759 (Phone)

HOME PAGE: http://web.missouri.edu/~cursb

Luciana Dar

University of California, Riverside ( email )

Sproul 2104
900 University Ave
Riverside, CA 92521
United States

HOME PAGE: http://www.lucianadar.com

Register to save articles to
your library

Register

Paper statistics

Downloads
264
Abstract Views
1,279
rank
114,753
PlumX Metrics