ESCAPE VELOCITY IN HIGHER EDUCATION: THE LOW-INCOME ENROLLMENT CONSEQUENCES OF COMPETITION FOR PRESTIGE AMONG PRIVATE NON-PROFIT COLLEGES AND UNIVERSITIES IN THE UNITED STATES

Abstract

This thesis examines how competition for prestige among 188 private non-profit colleges and universities in the U.S. is associated with low-income enrollment outcomes from 2009-2014. We use per-student allocation of merit aid as our primary proxy for competitiveness, theorizing that merit aid’s direct impact on a large proportion of the influential U.S. News & World Report’s (USNWR) ranking criteria makes it an indispensable competitive tool. We also speculate that the extent of an institution’s use of merit aid indicates the presence (or absence) of other competitive behaviors that are not as readily observable, such as strategic financial aid offers. We hypothesized that larger average merit aid awards would be associated with lower proportions of Pell Grant recipients enrolled due to those students’ minimal impact on institutional prestige as measured by USNWR rankings criteria, and that this relation would vary depending on a school’s position in the prestige hierarchy. Segmenting by three tiers of institution median SAT scores, we found that a 10% higher average merit aid award per student was associated with ~1% and ~2% fewer Pell Grant recipients enrolled among bottom and middle-tier schools, respectively, while there was no significant relation among top-tier institutions. We conclude that an institution’s position in the prestige hierarchy is an important determinant of the consequences of competitive behavior regardless of Carnegie Classification. Institutions exhibiting more overtly competitive behavior the closer they advance to achieving “escape velocity” (i.e. breaking through to the top tier) enroll fewer low-income students, all else equal.