Saturday, February 2, 2008

How Colleges Benefit from Financial Aid

Higher Ed/: Financial Aid is like Popcorn

After what looks like a small break from blogging, there's a great new post at

If you've ever wondered why higher education institutions are so willing and 'generous' with financial aid, please check out this link and review the graphs. Like any product or service, demand is highest at the lowest cost - but whoever is selling the product or service wants to maximize revenue by finding the best combination of price and demand.

Taken further, schools can apply what they know about demand and what they know about their applicants - matching the most cost-sensitive students with the best financial aid plans and by charging more to the students who are likely to be able to afford it.

I believe this post answers some questions about why colleges and universities have an incentive to provide financial aid - but it also raises more questions.

Is the net effect of financial aid to assist lower-income students, or just make a college education more expensive overall? The debate has been going on for a long time, and there's no easy answers to that one.

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