Affiliation:
1. Congressional Budget Office
Abstract
This article presents a policy-oriented microeconomics model of college selection by undergraduates. The data base is detailed information on 1,008 college students. College choice is explained as demand for a multifaceted commodity bundle which is the institution. Demand is a function of the student's ability, family income, and the prices and aid offers of the schools in the student's opportunity set. The sample was stratified by income class to lest for the stability of coefficients across income groups. The model yields predictions concerning the effects of recent federal legislation and of the Carter educational finance initiative on college attendance. Direct student aid is found to be far less effective than price cuts in increasing the range of schools financially accessible to lower- and middle-income students.