Public subsidies, tuition, and public universities' choices of undergraduate acceptance and retention rates in the USA

Joe Kerkvliet and Clifford Nowell

Education Economics, 2014, vol. 22, issue 6, 652-666

Abstract: We model how public undergraduate universities alter acceptance and retention rates due to changes in tuition and enrollment-based subsidies. Per student subsidies differ for senior and freshman students, as is true in most states. The university accepts students from an applicant pool which is influenced by quality of education and the probability of completion, both of which are influenced by retention rates. The model predicts that changes in admission and retention rates depend on how the applicant pool changes with retention, whether or not net revenue from undergraduate education is positive, and differences between marginal revenue and marginal cost for senior students.

Date: 2014
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DOI: 10.1080/09645292.2012.659010

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