Interactions Between Quality, Affordability, and Income Groups at Private Colleges and Universities

Abstract

The purpose of this non-experimental study was to utilize a resource dependence theory (RDT) conceptual framework to examine differences between quality, affordability, and undergraduate enrollment based on private nonprofit four-year colleges and universities’ (PCUs) institutional characteristics from the Integrated Postsecondary Education Data System (IPEDS) database. The results demonstrated that admission selectivity has the largest effect on variations in average undergraduate tuition, expenditures per student (EPS), six-year graduation rates, the percentage of Pell grantees, and the percentage of nonresident alien (NRAL) undergraduate students. From the perspective of RDT, these findings indicate that powerful PCUs utilize their market power to influence the supply of academically well-prepared students in the PCU enrollment market. The results also indicated there was an inverse relationship between quality and affordability—for students and institutions. An increase in quality costs students more in tuition, and it also costs institutions more in institutional aid. Further analysis showed that the inverse relationship between quality and affordability persists even when moderated by high- and low-income enrollment groups. Of note, PCUs with high rates of low-income enrollment and high EPS had lower student share of the cost (SSC) than PCUs with low or moderate low-income enrollment levels; however, there were few PCUs in the sample that met this condition. High-income enrollment is concentrated in large, more selective, secular, doctoral institutions, which also have higher SSC than other institutional categories. This suggests high-income students were willing to pay a premium for the benefits of quality, which conforms with previous literature.