Today, the cost of college is high and is continuing to rise. However, the number of students attending college has risen in the last twenty years. Importantly, how are more students having the ability to pay for the rising cost of higher education? To cover the rising cost colleges and universities have implicated a program of merit aid (non-need-based aid) and financial aid. This creates a discussion on whether merit aid benefits all students at every income level. However, to understand how important merit aid is one must understand the students’ elasticity of demand for college. The case study on the Robinson College reveals how the elasticity of demand and merit aid work to reduce students’ elasticity of demand, and how it increases revenue …show more content…
Applicants’ demand for colleges is based on the price of the college, like other goods and services. For example, a price rise of a good will cause a change in the quantity demanded of an output. It is important to know how responsive consumers are to a change in price. To know this responsiveness to the price one must calculate the elasticity of demand of a good or service. It is the mathematical way to understand how responsive consumers are to a change in prices. There are different types of elasticity; inelastic means as consumers will buy something even if the price rises and elastic means as the price rise demand of an output will drop. Factors that affect the elasticity of demand are substitutes, time, and the amount of income spent on an output. Merit aid makes the elasticity of demand for students inelastic. The more inelastic a college or university is the more likely a student will attend that college or …show more content…
The college wants to start a program of merit aid and side its financial aid program. Arguably, merit aid will increase revenue and quality of their students. It drives down the elasticity of demand for students. Appendix 1 shows that high-achieving student with no financial need has a high elasticity of demand. These students are responsive to price because they have been accepted to other colleges—a substitute—and the cost of college is a large part of their income. The college with the lowest cost is most likely where these students will attend. To reduce the elasticity of demand of their applicants, Robinson College will need to put in place a program of merit aid. The program will work toward the college goals of increasing revenue and quality of students. The increase in revenue may seem counter-intuitive as the college will be increasing the amount of aid that they give to their students. However, revenue will still increase because there is an increase in the number of students who enroll in the college. In turn, this will cover the cost of increasing the amount of overall aid given to
College is marketed towards students as an essential part of building a successful future. The United States “sells college” to those who are willing to buy into the business (Lee 671). With the massive amounts of student debts acquired every year, and the rising costs of
In all colleges in the United States, students are required to pay for their classes’ tuition either by themselves, their parents, guardians or a scholarship that they may have. The average tuition fee for an individu...
Adding such merit based criteria to Pell Grants means there will be a wide variety of people who are not eligible and thus cheapens the program. Goldrick considered the last merit-based Pell Grant, the Academic Competitiveness Grant (ACG). When it was implemented in 2006, the ACG gave the Pell Grant to students who took more rigorous high-school work. However, it served far less students than expected, adding substantially to administrative cost, and viewed as a failure (Goldrick, 3). Their idea behind this last-merit based program was to lessen the amount of people who were in need of the Pell Grant, and thus lessening cost. However, to improve its cost effectiveness there needs to be more low-income families enrolling in postsecondary schooling. Basing the Pell Grant off academic successfulness has proven ineffective and serves the opposite purpose of making college more affordable for all
Andrew Hacker and Claudia Dreifus report in their essay “Are Colleges Worth the Price of Admission?” what is expected from universities in exchange of their high costs. Currently, the price of education has duplicated its cost in comparison to the last generation (Hacker and Dreifus 179). Making a huge investment and getting poor results are the reasons what make parents and students hesitate before choosing a college. Hacker and Dreifus emphasize that colleges that are doing well their job share factors that make worth paying high tuition fees. These factors include: close relationships between professors and students, an adequate use of technology, and access to scholarships or part time jobs to make education affordable. Considering the
William J. Bennett, who was part of the Reagan administration as Secretary of Education, coined the correlation between loans and tuition prices. In 1987, William J. Bennett wrote an article called “Our Greedy Colleges” in The New York Times. He hypothesized that increasing the ease of obtaining a lot of money through financial aid has led to universities confidently increasing the price. They no longer have to worry about students coming into contact with the balloon costs they set. These increases in price without monetary restrictions have contributed to what could now be the next huge financial crisis. Bennett sees the increasing of tuition solely as university official’s greed to take more. One professor argues against Bennett’s hypothesis.
According to the Bureau of Labor Statistics, college tuition and relevant fees have increased by 893 percent (“College costs and the CPI”). 893 percent is a very daunting percentage considering that it has surpassed the rise in the costs of Medicare, food, and housing. As America is trying to pull out of a recession, many students are looking for higher education so they can attain a gratified job. However, their vision is being stained by the dreadful rise in college costs. College tuition is rising beyond inflation. Such an immense rise in tuition has many serious implications for students; for example, fewer students are attending private colleges, fewer students are staying enrolled in college, and fewer students are working in the fields in which they majored in.
Although a college education grows more and more expensive every year. People begin to question whether college is a good idea to invest in or not. “As college costs continue to rise, students and their families are looking more carefully at what they are getting for their money. Increasingly, they are finding that the college experience falls short of their expectations”(Cooper. H Mary). Many people believe that the cost of a college degree has outstripped the value of a degree.Studies show that a college degree will increase your earning power. A lot of people say that a college degree now is worth what a high school diploma was wor...
From conducting this survey, I learned that many students,whether they attend a public or a private school are unsatisfied with the rising tuition prices. The findings support my hypothesis. The next step in this research would to ask more college students about their thoughts and opinions about rising tuition prices. I would ask more students from different types of college and students taking on different types of degree. An implication this research could have for other research is that rising tuition prices are hurting students financially.
One cause of increased tuition is the reduction of state and federal appropriations to state colleges, causing the institutions to shift the cost over to students in the form of higher tuition. State support for public colleges and universities has fallen by about 26% per full time student since the early 1990s. In 2011 American public universities took in more revenue from tuition than state funding. About 80% of American college students attend public institutions. In a financial bubble, assets like houses are sometimes purchased with a view to reselling at a higher price, and this...
Johnstone, Bruce. "Investing more equitably and efficiently in higher education, creating value for America." National Dialogue on Student Financial Aid (2003): 6-10. Print.
With the rapid growth of college tuition, it has become an important issue in higher education. College Tuition is simply defined as the charge or fee for instruction, at a private school or a college or a university. Most people agree today that college tuition is too high or that it needs to be completely dismissed. There are some however, that may disagree with the claim about college tuition and state that college tuition is necessary for college growth, and it’s primary purpose is to pay for college expenses to support the institution financially. Research shows that college tuition is too high and that debt has become a standard in America after attending post-secondary school.
As colleges’ funds dry up, colleges must turn to the public to further support higher education. By raising state taxes, colleges can collect funds to help improve the school’s budgets. The state provides funds from the taxes for colleges to receive a certain amount for each student currently enrolled. All community and traditional four year colleges collect these funds in order to maintain the school’s budget. As reporter, Eric Kelderman states, “less than a third of colleges’ budget is based from state taxes”. The school’s budget is how colleges are able to provide academic support programs, an affordable intuition, and hire more counselors. Colleges must now depend on state taxes more than ever for public colleges. Without collecting more funds from state taxes, as author, Scott Carlson explains how Mr. Poshard explains to senators “our public universities are moving quickly toward becoming private universities…affordable only to those who have the economic wherewithal to them” (qtd. in.) Public colleges must be affordable to anyone who wishes to attend. If colleges lack to provide this to students, it can affect dropouts, a student’s ability focus, and cause stress. The problem of lack of funding is that colleges have insufficient funds. Therefore, the best possible solution for the problem of lack of funding would be increasing and collecting more funds from state taxes.
A popular debate this past year has been if college is affordable and accessible for people in America. An average college student owes almost 30,000 dollars in student loans just for 4 years of college. This debt that students have raised Obama’s idea of making community college tuition free for 2 years. Obama says this plan would help almost 9 million students save 3,800 dollars of tuition per year. Overall, this plan would help college become more affordable and accessible for people in the middle or lower classes. Of course other people are against the idea of tuition free college. The Northwestern Research Team conducted interviews for about a year on students who completed a two-year college degree. The results showed that in high school
Paid participants were 30% more likely to register for a second semester than students who were not offered the supplemental financial aid. These students also earned more credits and were more likely to maintain an above C average. This result shows that cash incentives help students. In order for this system to work, the best students with A’s will need to receive sixty percent of the total money spent by students with bad grades and students with B’s will need to receive forty percent of the total money spent by students with bad grades.... ...
The analytical lens that will be constructed aims to allow for an interpretation of how students who are attempting to be upwardly-mobile are helped with moving beyond roadblocks that prevent mobility. This is mobility is achieved through a combination of adherence to meritocratic systems and the borrowing of cultural capital. I will argue that reproduction occurs when reliance on meritocracy in the educational system and the limited cultural capital of the student’s working-class parent/s are solely employed. In order to move beyond a mere reproduction of the parent’s social class, I argue that the student must interact with individuals or groups from higher social spheres who know how to activate cultural capital in specific instances