Cohort crowding: how resources affect collegiate attainment

education, including a mix of community colleges open to all students, comprehensive four-yearinstitutions with modest admissions standards, and flagship public research universities.State colleges and universities provide the majority of higher education enrollmentopportunities to their residents at a steep discount in price, made possible through substantialpublic subsidies. Table 1 summarizes the role of state appropriations in the current revenuestream of colleges and universities. Notably, state and local support accounted for 57.5% ofcurrent revenues at the public community colleges and more than 36% of revenues atcomprehensive four-year institutions. Although the share of state support (30%) is somewhatlower at public research universities, the levels tend to be higher, and these institutions also relyon a range of other non-tuition revenues including resources from private donations and researchsupport from the federal government. Overall, the data in this table show that tuition paymentsfall far short of covering total educational costs. 1As shown in the final columns of Table 1, there are substantial differences in tuitionprices between in-state and out-of-state tuition charges 2 and between private and publicinstitutions. It is these large differences in expected tuition prices that lead to a concentration onpublic colleges and universities as the institutions determining the choic e set within a state forstudents likely to be at the margin of college enrollment and completion.Private institutions, particularly the selective colleges and research universities, also relyheavily on non-tuition sources of revenue, including private contributions and income fromendowment. Nevertheless, the selective private institutions with substantial subsidies enroll avery small share of the undergraduate population. While the state-level is the appropriate unit ofanalysis for the consideration of the collegiate attainment of students likely to be at the margin ofdegree attainment, the most competitive level of colleges and universities (e.g., StanfordUniversity, Harvard University) define a highly integrated and national market that is unlikely toinclude students at the margin of college enrollment (Hoxby, 2000).Understanding how colleges and universities respond to changes in demand for highereducation, particularly those brought about by variation in the size of cohorts entering college,requires consideration of how non-tuition revenue affects the tradeoffs faced by these institutions.1 Estimates by Winston mentioned earlier place the degree of subsidy even higher, becauseconventional statements of revenues and expenses for colleges and universities fail to account for capitalcosts (both depreciation and the opportunity cost of funds), which account for an average of 25% ofeducational costs.2 The average ratio of in-state tuition to out-of-state tuition was .35 in 1996-97, amounting to anaverage tuition price difference of $6,145; examples of large differences include Colorado and Vermontwhere the difference between in -state and out-of-state undergraduate charges at the state universityexceeded $11,500 in 1996-97.4