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Access: Net prices, affordability, and equity at a highly selective college

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  • Hill, Catharine B.
  • Winston, Gordon C.

Abstract

All of the financial aid decisions at Williams College for the past fourteen years - nearly 14,000 of them - were used to see how much students actually paid for tuition, room, board, and fees to go to that highly selective and expensive school - their net prices. Williams practices need blind admission with full need-based financial aid and gives neither merit nor athletic scholarships - a family's economic circumstances are the only reason for a price adjustment. So these data can answer the motivating question of the study, "Can highly able low income students reasonably aspire to go to the best and most expensive colleges in the country?" Does need-blind admission and full need financial aid, in other words, really work to serve merit and equity at the same time? With income and net price data on all aided students and income data for families at the 95th and 99th percentiles of the US income distribution who pay the full sticker price, we can describe the net price pattern across the whole student population as pricing policies have evolved at Williams (and similarly at other highly selective schools). The end point - in the current academic year - sees a remarkable similarity in the shares of income paid for a year at Williams. Aided students across the five income quintiles pay, on average, 11% to 19% of their pretax family incomes - the lowest income quintile paying the smallest share - while those at the 95th and 99th percentiles, paying full price, spend 21% and 9% of their family incomes, respectively, for a year at Williams. One usefully concrete number: the average student in the bottom twenty percent of the income distribution pays $1,683 while the full tuition is $32,470.
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  • Hill, Catharine B. & Winston, Gordon C., 2006. "Access: Net prices, affordability, and equity at a highly selective college," Economics of Education Review, Elsevier, vol. 25(1), pages 29-41, February.
  • Handle: RePEc:eee:ecoedu:v:25:y:2006:i:1:p:29-41
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    1. Amy Ellen Schwartz & Benjamin Scafidi, 2004. "What's Happened to the Price of College?: Quality-Adjusted Net Price Indexes for Four-Year Colleges," Journal of Human Resources, University of Wisconsin Press, vol. 39(3), pages 723-745.
    2. Gordon C. Winston, 1999. "Subsidies, Hierarchy and Peers: The Awkward Economics of Higher Education," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 13-36, Winter.
    3. Holger Sieg & Dennis Epple & Richard Romano, 2003. "Peer effects, financial aid and selection of students into colleges and universities: an empirical analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 501-525.
    4. Rothschild, Michael & White, Lawrence J, 1995. "The Analytics of the Pricing of Higher Education and Other Services in Which the Customers Are Inputs," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 573-586, June.
    5. Winston, G.C. & Zimmerman, D.J., 2000. "Where is Aggressive Price Competition Taking Higher Education?," Williams Project on the Economics of Higher Education DP-56, Department of Economics, Williams College.
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    Cited by:

    1. Shao, Ling, 2014. "Estimating the relationship between calculated financial need and actual aid received using quarter of birth instruments," Economics of Education Review, Elsevier, vol. 42(C), pages 165-174.
    2. Samuel Jebaraj Benjamin & M. Srikamaladevi Marathamuthu & Saravanan Muthaiyah & Murali Raman, 2011. "Affordability of private tertiary education: a Malaysian study," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 38(4), pages 382-406, March.
    3. Donald Lien, 2007. "The Role of Scholarships in Study Abroad Programs," Education Economics, Taylor & Francis Journals, vol. 15(2), pages 203-213.
    4. Kim, Matthew, 2010. "Early decision and financial aid competition among need-blind colleges and universities," Journal of Public Economics, Elsevier, vol. 94(5-6), pages 410-420, June.
    5. Zeky Murra-Anton, 2022. "Financial aid and early admissions at selective need-blind colleges," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 74(3), pages 833-870, October.

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