Differential Tuition Impact

In some fields, charging more discourages enrollments, especially of female and minority students, study finds.

July 15, 2013

When public universities impose higher tuition rates on some academic programs, students are discouraged to enroll in some fields, according to a new study.

Engineering enrollments declined by 1.1 percentage points (on a base of 14.7 percent) three years after the imposition of higher tuition for the field, found the study, which examined public research universities with differential tuition. Business programs saw smaller declines in enrollment and nursing saw a small (but statistically insignificant) gain in enrollments three years after tuition was raised for that field above standard rates.

The study also found that enrollment decisions of female and minority students are more likely to be influenced (negatively) by higher tuition rates for programs than are white men. And the study found no evidence that additional financial aid negates the impact of higher rates for selected programs.

The research was done by Kevin M. Stange, assistant professor of public policy at the University of Michigan, and it was released by the National Bureau of Economic Research (abstract available here). Stange used data from the Integrated Postsecondary Education Data System for 161 public research universities. He examined those 50 that had imposed additional tuition for some some fields, and looked at the impact after three years of higher fees for engineering, business and nursing.

Stange writes in his paper that the findings suggest different levels of price elasticity for different disciplines, and that policy makers should not assume they will get the same increase across disciplines for heightened tuition rates. At the same time, he noted that his findings for engineering suggest that colleges may not gain much additional money from raising rates in expensive fields -- since the institutions could end up with smaller numbers of students.

"My results suggest that implementing these differentials may indeed impact the fields that students pursue," he writes. "Furthermore, since differentials may reduce demand, these policies may not raise as much revenue as expected. It is important for colleges to understand how the revenue and student impact of differential pricing compares to alternative pricing schemes such as across-the-board tuition increases or tuition increases for wealthier or out-of-state students."

Stange's paper notes that differential tuition is becoming more popular as a policy in public higher education. In theory, it provides extra funds in expensive programs and avoids the sort of across-the-board tuition increases that can be unpopular with students and politicians.

A study last year by the Cornell Higher Education Research Institute found that differential tuition rates by program were pretty much unheard-of through 1980, but have gradually grown since then. According to the study, a majority of flagship public universities now have differential rates.

The norm for differential tuition has been for universities to raise rates for programs like engineering and nursing that may be more expensive to run because of laboratories, equipment or higher faculty salaries. More recently, some -- most notably Florida Governor Rick Scott, a Republican -- have urged universities to raise the rates for humanities programs. The idea is to disfavor non-science and technology programs so more students would enroll in STEM fields.

Via e-mail, Stange said that the differential tuition rates he studied were "exactly the opposite" of the idea proposed for Florida, where a higher rate is being proposed specifically to discourage enrollments. But Stange said that "extrapolating beyond the policies I study," he was not sure Governor Scott would get what he wanted from higher tuition rates for non-STEM fields.

"I worry that it may not provide enough funding and capacity for any additional students who want to study engineering," he said. "You need both an increase in demand and supply for it to work, but I have not seen any discussion about how they will expand supply/capacity for these majors that are made more desirable."

Share Article

Back to Top