Measuring the Effects of Financial Aid Revenue on Cost and Quality at American Land-Grant Universities

Abstract

This analysis measures the effects of revenues in the form of state-based and federal grants on measures related to student cost of attendance and educational quality. Included in the cost measures are tuition and fee costs, as well as levels of institutional aid and debt levels. Quality is measured by instructional expenditures per student and academic caliber of incoming freshman. The sample of institutions is comprised of 14 public, land-grant universities in the U.S. Data from the Delta Cost Project is explained and coefficients are estimated using an OLS regression model. Findings indicate that there is some upward effect of financial aid revenue on tuition costs in some cases. Findings on the effects of grant revenue on quality suggest that aid revenue does impact quality, though the results are limited by small sample sizes.