Pricing public sector services: The tuition gap

The large gap between the tuition charged by public colleges and universities and private ones is likely to cause severe disruptions to the private sector institutions of higher education. If it continues, private sector institutions may once again become bastions for students who can afford their services, rather than for those who merit them, and these institutions will diminish in size and diversity as well. Public sector institutions will become relatively stronger - not solely for reasons of effectiveness, efficiency, or equity - but because of the competitive advantage that the tuition gap affords them. This paper explores the feasibility and desirability of the three methods of correcting this problem, using real cost and demand data from the University of Massachusetts for illustrative purposes. It concludes the subsidization of students (rather than institutions) and raising public sector tuitions are two possible alternatives to the present tuition gap.     

Revenue Diversification in Public Higher Education: Comparing the University and Polytechnic Sectors

Financial stringency has been an increasing concern in the higher education sector, especially in the aftermath of the financial crisis. As a result, public higher education institutions have been under increasing pressure to diversify their funding sources through tuition fees and other nonpublic revenues. This article reflects on the institutional impact of those changes by analyzing a panel of 30 higher education institutions from the Portuguese public university and polytechnic sectors for the period between 2003 and 2009. The authors explore the relevance of institutional characteristics such as enrollments in undergraduate and postgraduate programs, the qualifications of academic staff, and the regional environment where institutions are located. Results suggest that certain institutional characteristics related to mission differentiation and the path of development of binary systems are important determinants of higher education institutions’ ability to earn income from tuition fees and other nonpublic sources.     

Subsidizing the affluent: the case of medical education.

State and federal funds are important sources of revenue for medical schools, and a strong case can be made for public support for these institutions. Although the federal role is more widely known, the states in fact provide the bulk of direct support for medical training. The nature of aid from the two sources differs in significant ways. Most federal aid supports research or patient care, but much of state aid goes to support unconditional tuition subsidies. The primary beneficiaries of these subsidies are relatively affluent nonminority students who are beginning lucrative careers in the medical field--careers that would be lucrative even if no subsidies were provided. Nor does it appear that general subsidies are needed to attract poor and minority applicants. While targeted loans and scholarships to individuals may be justified, general tuition subsidies are not.     

Higher Education and the Referendum on Scottish Independence

During the course of the referendum campaign, the Scottish government argued that free tuition for Scottish and EU students symbolised Scotland's preference for universal services and was intrinsically fairer than the ‘marketised’ systems operating in the rest of the UK. Invoking principles of both social justice and pragmatism, three distinct critiques of the Scottish government's higher education policy were mounted and adopted by different policy actors for different political purposes. Following a discussion of these arguments, this article concludes that a more nuanced discussion of higher education policy in Scotland is required, focusing not just on the absence of tuition fees but also on the distribution of debt and allocation of funds across the entire education system. We also note that the focus on tuition fees policy suggests that higher education systems across the UK are set on a process of divergence, whereas there are strong pressures towards policy convergence in areas such as research policy and internationalisation.     

Educational vouchers: Effectiveness,choice, and costs

Most of the policy discussion on the effects of educational vouchers has been premised on theoretical or ideological positions rather than evidence. This article analyzes a substantial body of recent empirical evidence on achievement differences between public and private schools; on who chooses and its probable impact on educational equity; and on the comparative costs of public and private schools and an overall voucher system. The findings indicate that: (1) results among numerous studies suggest no difference or only a slight advantage for private schools over public schools in student achievement for a given student, but evidence of substantially higher rates of graduation, college attendance, and college graduation for Catholic high school students; (2) evidence is consistent that educational choice leads to greater socioeconomic (SES) and racial segregation of students; and (3) evidence does not support the contention that costs of private schools are considerably lower than those of public schools, but the costs of an overall voucher infrastructure appear to exceed those of the present system.     

In‐state tuition for the undocumented: Education effects on Mexican young adults

This paper examines the effect of tuition subsidy in the form of in‐state tuition to undocumented students on the education of noncitizen Mexican young adults. The policy is found to be associated with a 2.5 percentage point increase in college enrollment (base mean = 8%), a 3.7 percentage point increase in the proportion of students with at least some college education (base mean = 10%), and a 1.3 percentage point increase in the proportion with at least an associate degree (base mean = 4%). These results are robust to a variety of specifications. When the analysis is restricted to samples more likely to be affected by the policy, point estimates become larger. The study finds no evidence that in‐state tuition policy for the undocumented adversely affects the educational outcomes of natives. © 2008 by the Association for Public Policy Analysis and Management.     

Evaluating the Effects of Universal Place‐Based Scholarships on Student Outcomes: The Buffalo “Say Yes to Education” Program

A growing number of cities and states have been providing large tuition subsidies for residents through initiatives often called “place‐based” or “Promise” scholarship programs. We examine the effects of a prominent last‐dollar, place‐based scholarship program, Say Yes to Education in Buffalo, NY, on college matriculation and persistence. Employing a difference‐in‐differences strategy comparing changes across cohorts of students eligible and ineligible for large college scholarships, we find that scholarship eligibility is associated with an increase of 20 percent in the likelihood of matriculating into college within one year of graduation, and an increase in the likelihood of persistence into a second year of college of nearly 16 percent. Increases in matriculation are largely at four‐year institutions, where most of the additional funding from Say Yes is concentrated, exclusively at in‐state institutions, both public and private, and are largest at colleges with more selective admission rates. Finally, we see the largest increases in matriculation and persistence among students who attend high schools in the middle third of the poverty distribution. These results suggest that the additional aid provided by Say Yes plays an important role in increasing college matriculation and encouraging students to attend more selective schools.     

Financial aid and for‐profit colleges: Does aid encourage entry?

Concerns over rising college tuition and slow economic growth have brought renewed attention to the role of federal and state financial aid programs in opening access to education. Despite a large body of literature examining the effects of grant aid on four‐year and public two‐year college enrollment, for‐profit colleges—particularly the vast majority that offer two‐year degrees and certificates—have largely been ignored. Using panel data methods and a new administrative data set of for‐profit colleges operating in California between 1989 and 2003, I assess the impact of the federal Pell Grant program, the G.I. Bill, and California's Cal Grant program on the net number of for‐profit colleges per county. The results suggest that for both Pell and Cal Grants, increases in the per‐student maximum award encourage for‐profit entry. This relationship is particularly strong in counties with high adult poverty levels, where more students are eligible for aid. Further, these gains in the private sector do not appear to come at the expense of the public sector. Rather, public community colleges also experience enrollment gains as the generosity of Pell and Cal Grants increases, although this reaction appears to be weaker than the reaction of for‐profits. © 2010 by the Association for Public Policy Analysis and Management.     

The Impact of School Choice on Public School Budgets: Evidence From Open Enrollment in New York City

This paper examines budgetary responses of public schools to competition from school choice, exploiting a discrete change in the choice set available to New York City high school students in 2003–2004. Schools facing increased competition (zoned, unscreened, and those with few applicants) increase per-pupil expenditures on noninstructional functions, reducing resources for instruction. Thus, schools may face important tradeoffs when competing for applicants, including between quantity and academic quality of applicants and between incentives to reach capacity and to improve academic outcomes. While advocates claim that school choice improves academic achievement, these results may help explain mixed findings in the previous literature.     

Choice in a World of New School Types

As school choice options have evolved over recent years, it is important to understand what family and school factors are associated with the enrollment decisions families make. Use of restricted‐access data from the Early Childhood Longitudinal Study allowed us to identify household location from a nationally representative sample of students and to match households to the actual schools attended and other nearby schools. This matching is significant as previous research generally has not been able to link individual households to school enrollment decisions. Using these data, we examined the role that socioeconomic status, race, and ethnicity play in school enrollment decisions. One of our more interesting results suggests that the newest public alternative, charter schools, attracts families with higher socioeconomic status than those that traditional public schools attract. The attraction of charter schools, however, unlike traditional public schools, appears to be racially and ethnically neutral. Families do not choose a charter school because of its racial or ethnic composition, nor do race and ethnicity within a household influence its choice of charter schools. Other socioeconomic factors influencing charter school choice are more similar to factors explaining private school choice than to those factors explaining the choice of traditional public schools. The findings suggest that policies governing the design of charter schools should focus on broader socioeconomic diversity rather than race only.     

Exchange, unanimity and consent: a defence of the public choice account of power

An enduring criticism of public choice theory is that it does not adequately address the question of power in contemporary capitalist societies. In particular it is argued that the exchange paradigm and the principle of unanimity lead to a conservative defence of the unequal and unjust status quo of such societies. These criticisms are often presented as unanswered and unanswerable. Indeed, public choice scholars have tended to pursue their own research agendas rather than engage such criticisms. This article seeks to make good this lacuna by providing a defence of the public choice account of power. It is shown that within the public choice approach the exchange paradigm and the unanimity principle serve as idealized models against which to judge real world institutional arrangements. As such, these models serve as a basis for critique of contemporary capitalist societies in which all individuals may be subject to predation as a matter of routine. It is shown that the public choice account of power addresses the legitimization and limitation of power, whereas the critics of public choice in effect propose to allocate power to those deemed deserving. Hence, the public choice approach provides a basis for a genuinely consensual politics and exposes the fact that alternative conceptions of politics are fundamentally non-consensual. On this basis it is concluded that the public choice account of power in contemporary capitalist societies is superior to that offered by its critics.     

Private Schools and the Parents that Choose Them: Empirical Evidence from the Danish School Voucher System

Research on the effect of school choice on student performance has generally been based on small-scale experiments or comparisons of Catholic and public schools in the United States. Recent studies indicate, however, that the market competition stemming from school vouchers does not affect all private schools equally. This study makes use of individual-level register data on the performance of more than 30,000 students in Denmark, where private schools have been voucher-financed for more than 100 years, while public schools are governed and financed by the politico-administrative system. Using an instrumental variable model to exclude selection effects, the results show no significant average effect of private schooling on final examination scores. However, a multilevel model shows that private schools of high socio-economic status perform better than similar public schools, while private schools of low socio-economic status under-perform – even for individual students with high socio-economic status. This indicates that the institutional setting of a voucher system is not enough to raise educational performance in general, arguably because some parents choose schools on the basis of non-academic criteria.     

Trust, Trusts, and Accountability: The Role of States in College Saving Plans

With the adoption of Section 529 plans, states have played an increasing role in college savings. When parents prepay for their children's college education, states invest the proceeds with the expectation that the investment returns will cover tuition increases. In times of fiscal stress, states decrease funding for higher education, causing schools to increase tuition. Because current investment returns have not kept pace with tuition increases, state managers have an even greater burden to ensure that these funds are managed properly. Our research interest is the fiduciary role of state governments in managing these plans in a volatile investment market.     

Higher Education as an Arena for Political Socialisation: Myth or Reality?

Political values and voting behaviour differ significantly between employees in the public and the private sectors, to the extent that some have called this one of the most important political cleavages in modern societies. But what causes these differences? The article outlines two hypotheses, one being the possibility that political values are shaped during higher education. To try and shed some light on this hypothesis, the political values of two groups of students at Agder University College in southern Norway were studied over a period of time. One group of students studied disciplines – nursing, social work, and teaching – that would almost without exception give them jobs in the public sector. The other group studied economics, a subject that for most of them would lead to a job in the private sector. Their political values were then measured at two points in time: when beginning study and after three years of studying. The main conclusion is that political values differ when the students begin to study, and that most political values change only marginally during the three‐year period. The few changes that occur during the period hint at a minor tendency for students to become more politically alike, indicating that higher education has a slight homogenising effect on political values. For one type of political values, however, rather dramatic changes take place. Both student groups acquire significantly more non‐authoritarian values during studies, indicating that higher education may be an important cause of such values.     

The real costs of tuition tax credits

Calculations of the costs of tuition tax credits should include estimates of the induced migration from public to private schools. The estimate by the President's advisors that his 1983 tax credit proposal would cost up to $800 million by 1986 neglected the migration factor. It is demonstrated that a migration from public to private schools of about from 1 to 1.4% of the present public school enrollment is all that is necessary to secure savings from migrants that just offset the loss in federal tax revenue from tax credits granted to incumbent private school families. Greater migration will generate net revenue gains to governments as a whole.     

The performance of charter schools in Wisconsin

How have charter schools in Wisconsin performed relative to traditional public schools? Two analyses provide an answer: First, a comparison of achievement test scores for students in Milwaukee charter and traditional schools from 1998 to 2002 for grades 3 through 10 finds a relative advantage for charter school students using fixed effects and first difference specifications. Second, a methodological approach new to the debate over performance in choice schools assesses schoollevel standardized tests in the fourth and eighth grades for 2000–01 and 2001–02. The results for fourth grade are generally favorable for charter schools; those for eighth grade are mixed. Overall, the results from these two analyses suggest that charter schools in Wisconsin are performing somewhat better than the traditional public schools from which they draw students. © 2007 by the Association for Public Policy Analysis and Management     

THE CURRENTS BENEATH THE “RISING TIDE” OF SCHOOL CHOICE: AN ANALYSIS OF STUDENT ENROLLMENT FLOWS IN THE CHICAGO PUBLIC SCHOOLS

Existing research highlights that families face geographic, social, and psychological constraints that may limit the extent to which competition can take hold in school choice programs. In this paper, we address the implications of such findings by creating a network of student flows from 11 cohorts of eighth‐grade students in the Chicago Public Schools (CPS). We applied a custom algorithm to group together schools with similar sending and receiving patterns, and calculated the difference in mean achievement between a student's attended and assigned high schools. For all identified school groupings, we found that the students were on average moving to higher achieving schools. We also found that the movement toward higher achieving schools of the top achievement quartile of students was over twice as large as that of the bottom quartile, but that the flows of both the highest and lowest achieving student quartiles were toward higher achieving destinations. Our results suggest that student movements in CPS between the years of 2001 to 2005 were consistent with creating market pressure for improvement as well as increasing segregation by achievement. However, further research into how schools responded to those movements is required to make inferences about the level or consequences of competition generated by choice‐related reforms during that time.     

College Enrollment and Completion Among Nationally Recognized High‐Achieving Hispanic Students

Hispanic high school graduates have lower college completion rates than academically similar white students. As Hispanic students have been theorized to be more constrained in the college search and selection process, one potential policy lever is to increase the set of colleges to which these students apply and attend. In this paper, we investigate the impacts of the College Board's National Hispanic Recognition Program (NHRP), which recognizes the highest‐scoring 11th‐grade Hispanic students on the PSAT/NMSQT, as a mechanism of improving college choice and completion. The program not only informs students about their relative ability, but it also enables colleges to identify, recruit, and offer enrollment incentives. Overall, we find that the program has strong effects on college attendance patterns, shifting students from two‐year to four‐year institutions, as well as to colleges that are out‐of‐state and public flagships, all areas where Hispanic attendance has lagged. NHRP shifts the geographic distribution of where students earn their degree, and increases overall bachelor's completion among Hispanic students who traditionally have had lower rates of success. These results demonstrate that college outreach can have significant impacts on the enrollment choices of Hispanic students and can serve as a policy lever for colleges looking to draw academically talented students.     

Differential Pricing in Undergraduate Education: Effects on Degree Production by Field

In the face of declining state support, many universities have introduced differential pricing by undergraduate program as an alternative to across‐the‐board tuition increases. This practice aligns price more closely with instructional costs and students’ ability to pay postgraduation. Exploiting the staggered adoption of these policies across universities, this paper finds that differential pricing does alter the share of students studying engineering and possibly business. There is some evidence that student groups already underrepresented in certain fields are particularly affected by the new pricing policies. Price does appear to be a policy lever through which state governments can alter the allocation of students to majors and thus the field composition of the workforce.     

Coexistence of public and private job agencies: Screening with heterogeneous institutions

In response to the analysis of bureaucracies and the finding of inherent inefficiencies, public choice theory argues for an increase in competition by contracting out government services and deregulation. The paper explores the effect of coexisting public and private employment services in a model with private information of the worker about her ability and unobservable effort choice. The employer's use of an efficient unemployment exchange and an efficient private agency may lead to optimal screening with first best contracts. This is due to the assumption that good types of workers lose more human capital than bad types in periods of unemployment or mismatch. In contrast to standard screening contracts, a bad type of worker earns an information rent if the employment exchange is inefficient, but the employer chooses not to use the private agency for good types.