Private Colleges' Pricing Experience in the Early 1990s: The Impact of Rapidly Increasing College-Funded Grants.

Abstract

During the early 1990s, percentage increases in private colleges' “sticker prices” continued to outpace increases in the economy-wide inflation rate, input prices, and income growth; but after netting out the effect of rapidly increasing college-funded grants, the positive differentials appear to have decreased relative to the 1980s. Perhaps as important as the overall picture, substantial dispersion exists among private colleges in the actual net prices received by the colleges from full-time freshmen. While total revenue net of college-funded grants increased at healthy rates in the aggregate, a substantial subset of colleges experienced declines or subdued growth in net revenue. Shortfalls in the growth of net revenue were especially concentrated among colleges with less stringent admissions selectivity. The broad dispersion of college experiences supports the view that, in the context of national estimates of student responsiveness to price and aid changes, college decision makers consider their own college's special characteristics and local conditions in making price and aid decisions.