The Heterogeneous Nonresident Student Body Measu

Authors: Manuel S González Canché

Publish Date: 2016/07/12

Volume: 58, Issue: 2, Pages: 141-183

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Abstract

More than 40 years of research has found a positive relationship between increases in the proportion of nonresident students enrolling in an institution and increases in the tuition prices this institution charges to these same students Notably this line of research has consistently treated this nonresident student body as if they constitute a homogeneous group in terms of their socioeconomic wellbeing when in reality these students come from states with differing levels of socioeconomic prosperity Notably given that tuition and fee charges to nonresident students are marketbased institutions charge what outofstate students are willing to pay Under this rationale it follows that the wealthier the student body of an institution is the more institutions will be able to charge them in terms of tuition and fees for their education The purpose of this study is twofold First it offers a method to measure the level of wealth of the nonresident student body enrolling at an institution considering the level of wealth of these students’ home states therefore creating a measure of heterogeneity of the nonresident student body The second purpose is to evaluate whether this measure of heterogeneity is associated with larger increases in the net tuition and fee prices charged to these students compared to the increases related to the homogeneous structure that ignores these students’ homestate wealth This twofold purpose was addressed utilizing a dataset built from regional state and institutional information of 1743 public and private notforprofit 4year institutions across the contiguous United States Since all the outcome variables were found to be spatially dependent spatial econometrics techniques were employed for model estimation Results corroborated that treating nonresident students as a homogeneous structure rendered downwardly biased estimates of institutions’ abilities and/or decisions to set higher or lower tuition and fee prices compared to the estimates obtained using the heterogeneous structure Considering current general disinvestment of states in higher education the analysis of factors driving nonresident tuition and fee pricesetting has become especially relevant for public policy officials and decisionmakers at both the institution and statelevels Accordingly this study examines a critical issue in the finance of higher education—the setting of institutional tuition and fees for nonresident studentsI am grateful to Dr Timothy R Cain Institute of Higher Education University of Georgia and the two anonimous reviewers for their valuable comments and suggestions Similarly I want to thank graduate students and colleagues Lucia Brajkovic Jeffrey Harding Jason Lee Robert Stollberg and Melissa Whatley for their truly important help with the English language

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