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Shifting demand or just moving price?: A multi-level analysis of student price demand for college education and state policy preferences


College affordability and rising tuition and fees are a topic of national interest. While a number of recent studies examine this subject separately from state policy and individual student perspectives, the body of scholarship that reviews the intersection of two components of supply and demand for higher education is relatively small. My focus for this dissertation is to amplify the understanding of how individual characteristics of students explain differences in their price demand for college education in their first year at four-year public and private not-for-profit colleges and universities. I am also interested in analyzing how state policy preferences, namely state postsecondary education efforts and proportional shares of need-based state student grant aid, mitigate such individual differentials. Drawing from previous studies, my study is guided by a combination of the human capital investment perspective, student price responsiveness to college education, and college choice framework. I contend that the price tag of college education--either sticker or net--is roughly where a student's price demand meets a supply of college education. I also argue that a student's price demand for college education is shaped by different forms of capital (e.g., cultural, monetary, and social capital) that each student possesses; thus, some students have more willingness and ability to pay for college education than others. Further, public policy has a role in offsetting such differences in individual capital, thereby making college-going options more equitable regardless of socioeconomic status. I ran several multi-level analyses using the National Postsecondary Student Aid Survey (NPSAS) datasets of the 1999-00, 2003-04, and 2007-08 cohorts as well as institutional- and state-level data drawn from various sources. The result confirms the presence of "sticker shocks," or significant differences in student price demand for college, based on socioeconomic characteristics. The result also suggests that state postsecondary education efforts negatively correlate with sticker and net tuition and fees for students at public colleges and universities; however, this was not the case for states offering more need-based aid. Therefore, while state postsecondary education efforts offset individual differences in price demand for college education, the same was not true for direct student aid awards.

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