What’s Happened to the Price of College? Quality Adjusted Net Price Indices for Four Year Colleges

In this paper we estimate hedonic models of the (consumer) price of college to construct quality-adjusted net price indexes for U.S. four-year colleges, where the net price of college is defined as tuition and fees minus financial aid. For academic years 1990-91 to 1994-95, we find adjusting for financial aid leads to a 22 percent decline in the estimated price index for all four-year colleges, while quality adjusting the results leads to a further, albeit smaller, decline. Nevertheless, public comprehensive colleges, perhaps an important gateway to college for students from low-income backgrounds, experienced the largest net price increases.