Topic > Reasons for Rising Tuition Prices - 1381

In their article "Credits that Matter: How Credit Growth and Financial Aid Affect Tuition and Fees" authors Katherina Best and Jussi Keppo they devised a supply-demand model for higher education. They found that there is a direct association between tuition prices and demand. In other words, universities have found that the more prices increase, the more demand increases. In the article, the authors state: “Our findings indicate that consumers desire a more expensive education, but are hindered by credit constraints. Schools can therefore use prices as a signal of quality, incentivizing them to increase prices." (Page 593) In this quote, the authors claim to have found a correlation between higher tuition prices and desirability. Students are willing to pay much more for an Ivy-League-level education than for a state college. The apparent connection is understandable: the more you pay for school, the better your education. While this assumption is logical, it is not necessarily so