How these two issues impact each other differs depending on whether the institution is public or private. In public higher education, states are struggling to raise the quality of undergraduate education while keeping tuition cost down. In elite private higher education, the cost of tuition is rising beyond the financial ability of most students. Unpacking the concept of cost McPherson and Winston explain how students, their family, and society do not understand the concept of cost in higher education. Tuition that students pay does not have a direct relationship to what it costs to provide their education.
Private institutions use endowments to reduce tuition cost to students.
These practices result in an unique situation in that increased cost of higher education does not necessarily mean that there will be a corresponding increase in tuition which is different than most business and industries. The issues become more complicated when you factor in the perceptions that institutions that have quality higher education must have higher tuition rates. As the authors note, one good way for a college to send a strong message that it is a quality institution is to make sure its tuition is not below other institutions that are perceived as lower quality. I find the concept of intergenerational aid to be an interesting public policy issue. A great dissertation topic if someone is interested.