The Economics of Higher Education, Part 2: Different Major, Different Tuition
It has become increasingly common for colleges and universities to charge different tuition for different undergraduate majors. Do those prices actually influence degree production? In a new working paper (abstract; PDF), Kevin M. Stange argues that the answer is yes:
In the face of declining state support, many universities have introduced differential pricing by undergraduate program as an alternative to across-the-board tuition increases. This practice aligns price more closely with instructional costs and students’ ability to pay post-graduation. Exploiting the staggered adoption of these policies across universities, this paper finds that differential pricing does alter the allocation of students to majors, though heterogeneity across fields may suggest a greater supply response in particularly oversubscribed fields such as nursing. There is some evidence that student groups already underrepresented in certain fields are particularly affected by the new pricing policies. Price does appear to be a policy lever through which state governments can alter the field composition of the workforce they are training with the public higher education system.