Student Price Response in Higher Education: An Update to Leslie and Brinkman

In 1987 Larry Leslie and Paul Brinkman published an important review of the literature on the relationship between price and enrollment in higher education. Their article reviewed 25 quantitative analyses of this relationship, which varied in their data sources, methods of analysis, and population studied. In their later book, The Economic Value of Higher Education, the authors also reviewed 45 econometric analyses of the relationship between student financial aid and college enrollment. Leslie and Brinkman described why student demand research was important a decade ago, stating that "expanding and equalizing student access long has been a major public policy goal, and manipulation of price has been seen as the major policy instrument for achieving this goal" (p. 182). These words are no less true today, when both public and private college tuition prices have grown at rates that have far outpaced the ability of students and their families to pay for college. Table 1 presents the annual real increase in tuition and fee charges at public and private institutions, as well as the annual change in median family incomes for four periods over the last two decades. In the latter half of the 1970s, tuition prices at both public and 4-year private institutions fell in real terms, because tuition increases did not keep pace with the double-digit inflation of this period. In the 1980s real tuition rose in all sectors, but at a faster rate in private colleges. While the 1990s have seen a slowing of the rate of growth of private college tuitions, the rate at public colleges has increased. (1) This has occurred at a time when incomes in the country have stagnated, and the income gap between rich and poor families has widened. (2) The net result is that college is even less affordable today than it was ten or twenty years ago. TABLE 1 Annual Changes in Undergraduate Tuition Prices at Colleges and Universities, and Changes in Incomes Public College Tuition Private College Tuition Period 4-Year 2-Year 4-Year 2-Year 1976-1980 -3.1% -1.6% -0.8% 0.7% 1980-1990 4.3% 3.2% 5.0% 4.1% 1990-1994 6.1% 6.6% 3.1% 2.3% 1976-1994 3.0% 2.8% 3.2% 2.9% Median 4-Person Period Family Income 1976-1980 -1.2% 1980-1990 1.0% 1990-1994 0.4% 1976-1994 0.2% Source: Author's calculations from National Center for Education Statistics (1995), Table 306, and U.S. Bureau of the Census (1995). NOTE: All changes in constant (1994) dollars. Public tuition is for resident students and includes all mandatory fees (excluding room and board). Although the Leslie and Brinkman review was comprehensive at the time it was published, the most recent data they analyzed were from the early 1980s, with most studies using samples from the 1970s and earlier. These studies could not capture the effects of the increases in real tuition prices during the 1980s and 1990s. The price of college today receives even more attention than ever, with national newsmagazines trumpeting the "$1,000-a-week price tag at elite institutions" (Morganthau & Nayyar, 1996). Policymakers need to know today even more than ever what the effects of these increasing prices are. The ensuing years since the publication of Leslie and Brinkman's work have seen the release of many student demand studies that add more information to our understanding of the relationship between price and higher education enrollments. Many of these new studies look at the effects of different forms of financial aid separately from tuition changes. In addition, many focus on the effect of tuition and aid changes on students of different income categories, races, and in different college sectors. In this article I review approximately twenty quantitative student demand studies and examine their new findings in comparison to those of Leslie and Brinkman almost a decade ago. …