For-Profit and Traditional Colleges: Institutional Control and Financial Aid Allocation

39 Pages Posted: 16 Nov 2013 Last revised: 22 Mar 2015

See all articles by Michael Kofoed

Michael Kofoed

United States Military Academy

Date Written: March 20, 2015

Abstract

I examine differences in the competitive behavior between for-profit and traditional universities by modeling how these institutions allocate financial aid packages and set net cost according to differing objective functions. I test the implications of the model using data from the 2003-2004 and 2007-2008 waves of the National Postsecondary Student Aid Survey. I use an exponential regression model and correct for self-selection of students into institutions to estimate differences in pricing behavior. For-profit universities annually offer $819.69 less in institutional aid, while their students take on $1,978.45 more in unsubsidized student loans and pay a higher net price of $3,713.58.

Keywords: For-Profit Higher Education, Student Financial Aid, Price Discrimination

JEL Classification: I22, I28, H52

Suggested Citation

Kofoed, Michael, For-Profit and Traditional Colleges: Institutional Control and Financial Aid Allocation (March 20, 2015). Available at SSRN: https://ssrn.com/abstract=2353835 or http://dx.doi.org/10.2139/ssrn.2353835

Michael Kofoed (Contact Author)

United States Military Academy ( email )

600 Thayer Rd
West Point, NY 10996
United States
801-540-8789 (Phone)

HOME PAGE: http://https://sites.google.com/site/michaelkofoed1

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