Net tuition revenue generation at private liberal arts colleges

This paper analyzes the effects on net tuition revenue of changes in institutional aid and the tuition rate for a sample of private liberal arts colleges. A model in which institutional aid and enrollment are simultaneously determined is specified. Using the model's estimated parameters, the effects on net tuition revenue of changes in institutional aid and the tuition rate are calculated. We find that increases in aid and the tuition rate each increase net tuition revenues at the sample schools. Taken together, these calculations indicate that aid is distributed at these schools in a manner that boosts enrollment and earns a net revenue return from these expenditures.