Examining the Effects of Tuition Reset Policies on Enrollment and Institutional Finances at Minority Serving Institutions

This chapter addresses the unique financial situation of Minority Serving Institutions (MSIs) and empirically analyzes how changes in pricing strategies may impact student demand, enrollment, and institutional finances. The authors provide an overview of the history of MSIs and the complex set of policies dictating these institutions’ MSI designation(s) and sources of public funding. The authors then provide an overview of postsecondary pricing strategies and why MSI designation may be related to the success of differing approaches. Using a difference-in-differences estimation strategy, the authors find no evidence that demand, as measured by the number of applicants, increases following a tuition reset. However, private MSIs appear to grow Pell and overall enrollments and increase total tuition revenue by resetting tuition. Public MSIs do not appear to receive the same benefits. Across all institutions, larger resets appear to yield enrollment growth, especially among Pell recipients, which may reflect higher levels of sticker shock among lower-income students. These findings suggest the tuition reset strategy may only be effective in certain contexts and appear to be more successful at achieving enrollment goals than revenue goals.