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Effect of Shocks to College Revenues on For-Profit Enrollment: Spillover from the Public Sector
Sarena F. Goodman (au); Alice M. Henriques (au)
This study investigates whether declines in public funding for post-secondary institutions have increased for-profit enrollment. The two primary channels through which funding might operate to reallocate students across sectors are price (measured by tuition) and quality (measured by resource constraints). The authors estimate, on average, that a 10% cut in appropriations raises tuition about 1 to 2% and decreases faculty resources by 1/2 to 1%, creating large bottlenecks for prospective students on both price and quality. These cuts generate a nearly one percentage point increase in the for-profit market share of ńˇýelasticńˇŁ enrollment (i.e. attendees of community colleges plus for-profit institutions), owing entirely to students who, in a better funding environment, would have attended a public institution. The authors also show that for every 1% increase in flagship tuition generated by funding shortfalls, for-profit attendance increases by 1-1/2%. Tables and figure. This is a print on demand report.
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