The Price Elasticity of Freshman Enrollment Demand at a Historically Black College for Males: Implications for the Design of Tuition and Financial Aid Pricing Schemes that Maximize Black Male College Access

Abstract

IntroductionHistorically Black colleges and universities (HBCUs) had their genesis in post-emancipation progressive social ideals aimed at providing a college education for former slaves, for which there were few or no options at existing higher education institutions (Drewry & Doermann, 2001; Gasman, 2007; Hornsby, 1978). In contemporary times, although the descendants of slaves have broader college options not limited to HBCUs, there is evidence that HBCUs are still necessary because they provide access to a college education for Black Americans who otherwise would not have earned a college degree (Berger & Milem, 2000; Brown & Davis, 2001; Brown, Donahoo, & Bertrand; 2001; Drewry, & Doermann; 2001; Freeman & Cohen, 2001; Harper, 2007; Palmer & Gasman, 2008; Roebuck & Murty, 1993). Contemporary access to an HBCU education for Black Americans also appears to confer relatively superior career aspirations (Allen, 1992), and psychological and labor market outcomes (Price, Spriggs, & Swinton, 2011). Given such benefits to HBCU access, a case can be made that enhanced access to HBCUs would be socially beneficial (Young & McAnulty, 1978), as long as the benefits are no smaller than the cost of enabling access.Fundamentally, for any college/university the costs of educating students are at least partially funded by tuition and fees. In this context, maximizing student access can be achieved in two broad ways: (a) Charge a low tuition, and (b) Charge a high tuition with a cross-subsidization of the net tuition price for financially needy students (Rose & Sorenson, 1992). One can characterize these access pricing schemes as low tuition/low aid (LL) and high tuition/high aid (HH) respectively (Curs & Singell, 2010). If a goal of a college/university is to maximize access for capable students independent of their financial need, an HH tuition and aid pricing scheme could enable achievement of such a goal. As Curs and Singell (2010) noted, for the HH tuition and pricing scheme to be effective, a college/university must face a large group of students for which the demand for enrollment is inelastic relative to a desirable, and perhaps financially needy group of students for which the demand for enrollment is less inelastic.In this article, the authors explore if an HH tuition and financial aid pricing scheme is feasible for private HBCUs that enroll Black males by estimating the price elasticity of enrollment demand for a selective private all-male HBCU-Morehouse College. A focus on the sensitivity of Black male college enrollment to changes in the cost of attending college seems particularly warranted as HBCU enrollments have been found to be price-sensitive (Sissoko & Shiau, 2005). Moreover, HBCUs have been found to be well-suited for educating disadvantaged Black males (Palmer et al., 2010); capable of ameliorating the widening college persistence gaps (Wilson, 2007a; 2007b) and completion gaps (Buchmann & Diprete, 2006; Diprete & Buchmann, 2006) between males and females, and offsetting the declining Black male share of baccalaureate degrees (Harper, 2006).The inquiry makes at least three contributions. As the analysis considers the ideal tuition and financial aid pricing scheme that could maximize college access for Black males, the inquiry adds to the literature on education policy design that considers college educational subsidy redistribution, and its consequences for financially needy students and educational equity (Andrews, Ranchhod, & Sathy, 2010; Curs & Singell, 2010; Long, 2004; Mortenson 1998; Mumper, 2003; Paulsen, 1998; Singell & Stone, 2002). As estimates are provided of student price sensitivity to the costs of college, the inquiry also contributes to the literature on the price sensitivity of the demand for higher education-of which a select summary is provided by Gallet (2007) and Hemelt and Marcotte (2008). Last and perhaps most importantly, the inquiry contributes to the small but growing literature on the economics of HBCUs that considers their efficiency and efficacy in the production of college graduates (Constantine, 1995; Ehrenberg & Rothstein, 1994; Fryer & Greenstone, 2010; Mason, 2010; Mykerezi & Mills, 2004; 2008; Price, Spriggs, & Swinton, 2011). …