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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. All of the financial aid decisions at Williams College for the past fourteen yearsnearly 14,000 of them -were used to see how much students actually paid for tuition, room, board, and fees to go to that highly selective and expensive school -their net prices. Williams practices need blind admission with full need-based financial aid and gives neither merit nor athletic scholarships -a family's economic circumstances are the only reason for a price adjustment. So these data can answer the motivating question of the study, "Can highly able low income students reasonably aspire to go to the best and most expensive colleges in the country?" Does need-blind admission and full need financial aid, in other words, really work to serve merit and equity at the same time? Terms of use: Documents in EconStor mayWith income and net price data on all aided students and income data for families at the 95 th and 99 th percentiles of the US income distribution who pay the full sticker price, we can describe the net price pattern across the whole student population as pricing policies have evolved at Williams (and similarly at other highly selective schools). The end point -in the current academic year -sees a remarkable similarity in the shares of income paid for a year at Williams. Aided students across the five income quintiles pay, on average, 11% to 19% of their pretax family incomes -the lowest income quintile paying the smallest share -while those at the 95 th and 99 th percentiles, paying full price, spend 21% and 9% of their family incomes, respectively, for a year at Williams. One usefully concrete number: the average student in the bottom twenty percent of the income distribution pays $1,683 while the full tuition is $32,470. This is a study of college pricing as revealed in 13,419 financial aid decisions over 14 years at an expensive and highly selective private college, Williams. The school practices need-blind admission, full need aid and gives no "merit scholarships" so a family's economic circumstances are the only criteria for adjusting a student's net price, for financial aid. The paper does not, of course, describe "access to US higher education" in any broad sense, but it does describe affordability at a school that appears to be representative of most of the highly selective private colleges and universities in the country -Stanford and Yale and Swarthmore and MIT and the rest. 1 So it is relevant to the socially and politically important question: "C...

This paper demonstrates that increasing income inequality can contribute to the trends we see in American higher education, particularly in the selective, private nonprofit and public sectors. Given these institutions’ selective admissions and commitment to socioeconomic diversity, the paper demonstrates how increasing income inequality leads to higher tuition, costs, and financial aid. A numerical example is presented that estimates how much lower tuition, spending (costs), and financial aid would have been if household incomes in the United States had grown by the same aggregate amount between 1971 and 2009, but with no increase in income inequality. The policy implications include the government addressing rising income inequality directly or changing the incentives facing higher education and will be of interest to those concerned with the rising cost of higher education and issues of access and affordability.

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