Positioning Colleges and Universities for Future Success
Edited by Madeleine B. d’ Ambrosio and Ronald G. Ehrenberg
Chapter 5: Changing Student Access Through Strategic Pricing Initiatives
Donald E. Heller The topic of institutional tuition pricing and ﬁnancial aid policies has received much attention from college and university leaders, policymakers, researchers, and the public in recent years. As the cost of college has skyrocketed, relative to either consumer prices or increases in income in the country, more and more attention is being paid to the aﬀordability of and access to higher education. Data from the annual Trends in College Pricing report from the College Board (2006a) indicate that in the 25-year period from 1981 to 2006 real tuition prices (after taking into account inﬂation) increased 150 percent at private four-year institutions and almost 200 percent at public four-year colleges and universities. During this same period, the median income of all households in the nation grew less than 20 percent in real dollars (US Census Bureau, 2007b). The College Board (2006b) reports that ﬁnancial aid also has increased, and, in fact, the total amount of aid available has increased faster than have tuition prices – approximately fourfold during this same period. However, there have been signiﬁcant changes in the type of aid that is available and who receives that aid. First, loans have become a much more important part of the ﬁnancial aid landscape. While grants, and in particular federal grants, used to predominate, today federally guaranteed and private student loans are the primary source of aid, comprising over 55 percent of all aid available in 2005. Secondly, institutional grants – funded by colleges and universities either...
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