Estimating Tuition Elasticity of Student Enrollment: The Case of a Regional Comprehensive Master's Institution

Abstract

This study examines the tuition elasticity of student enrollment for a public regional comprehensive master’s university, Pittsburg State University in Kansas. Tuition elasticity is a measure of the responsiveness of student enrollment decisions due to changes in tuition over time. This measure is useful as it indicates how changes in tuition policy will affect revenue. Using 32 years of institutional, state, and national data, elasticity measures are estimated for various cohorts of students, including freshmen, transfers, undergraduates and graduate students. The model controls for factors other than tuition that are also likely to influence enrollment, such as: the availability of scholarships, household income, the relative cost of alternative schools, the economic environment, and the pool of recent high school graduates. The results indicate that freshman students are more sensitive to changes in tuition than other undergraduate students in general – a one percent increase in tuition and fees is expected to result in a decrease in freshman enrollment of between 1.19 and 1.29 percent, holding all else constant. Both undergraduate transfer students and graduate students are found to be insensitive to increases in tuition and fees. These and other results are discussed relative to their policy implications for similar institutions contemplating increases in tuition.