Student Price Response in Higher Education: The Student Demand Studies.
What happens to enrollments when colleges and universities raise their prices? Who, if anyone, is sent away? What is the net impact of higher prices and reduced enrollments upon institutional financial ledgers? These questions have been investigated in what have come to be called the "student demand studies," the phrase originating in economics as an outgrowth of demand theory. Demand theory holds that the quantity of a particular good or service demanded is a function of price, the money income of the buyer, the prices of other goods and services, and the buyers' tastes or preferences. The theory as applied to higher education has been used to suggest that (1) enrollment rates will be negatively associated with prices charged students, especially tuition prices; (2) enrollment rates will be positively associated with amounts spent on student aid, since student aid can be viewed as reducing net prices or increasing student money income; and (3) enrollments in higher education institutions or groups of institutions will be associated positively with the tuition prices charged by competitors for example, public college enrollments with private college tuitions and vice versa as students exercise their preferences.