The Supply Side of Higher Education: Higher Education Finance and the Potential of Using Institutional Incentives to Support Student Success

Author/s: 
Bridget Terry Long
Year of publication: 
2010
Session topic: 
Careers of faculty, administrators, and students in broad-access schools

There have been many contributions from the Economics of Education literature to build understanding about the demand side of higher education. Numerous studies have examined how background and various inputs, policies and other factors affect student behavior (Long, 2007). However, little is known about the supply side of the equation: the thousands of postsecondary institutions. Related to this is the paucity of information on how to produce better student outcomes and/or alter the incentives colleges face with the goal of improving student persistence and completion. Such answers are necessary as less than 60 percent of students at four-year colleges graduate within six years. Completion rates are especially alarming for low-income and minority students. While insufficient academic preparation is part of the problem, it does not fully explain differences in graduation rates by background. Among students who were identified as being college-qualified, only 36 percent of low-income students completed a bachelor's degree within eight years while 81 percent of high-income students did so (Adelman, 2006). Colleges and universities have some role to play in improving these numbers as even colleges with similar student bodies and resources can have very different graduation rates.

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