Colleges
and universities that spend more on students—even if they raise tuition prices—are
more likely to see a bounce in enrollment and graduation rates than schools
that trim their budgets and tuition rates.
A new
study from the National Bureau of Economic Research appears to upend the
conventional wisdom that reducing tuition would attract higher enrollment and
also help students finish their studies faster. At least for public schools,
according to a MarketWatch article about the study, the numbers are different.
“If
your goal is to graduate more students, spending increases work better
per-dollar than tuition cuts at accomplishing that goal,” noted David Deming,
who was among the researchers in the study. Deming is a professor of public
policy, education, and economics at the Harvard Kennedy School.
The
study found that, from 1990-2013, enrollment and graduation rates rose with
each 10% jump in a public institution’s spending. Schools that raised tuition
did not see any effect on those rates.
The
explanation, according to the MarketWatch article, is that institutions that
cut back on their budgets—and were unwilling to increase tuition—often covered
the financial gap by eliminating class sections. The end result was that more students
were closed out of courses they needed to complete for graduation.
