Efficient enrollments using high tuition-high aid |
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Authors: | Gary Fethke |
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Institution: | Departments of Business Analytics and Economics, Tippie College of Business, University of Iowa, United States |
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Abstract: | The goal of high tuition-high aid is to charge high-pay residents the nonresident tuition net of the state subsidy to support low-income residents. This approach often ignores differences in program costs and presumes the state appropriation will not react. Here tuition and subsidy structures are developed as rules in a welfare-maximization framework. Once fixed costs are accommodated, low-pay resident enrollments can be admitted at marginal cost, thereby achieving efficient enrollments. The models are applied to Penn State University, where it is shown that high tuition-high aid can approximate actual tuition policy, accommodate enrollments of low-income students, and increase total welfare. |
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Keywords: | High tuition-high aid Quasi-efficient subsidies Low-cost access Pay what you can afford tuitions |
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