High prices and low incomes: does a high sticker price tuition reduce the share of low-income students at private liberal arts colleges?

This study investigates the effect of the tuition sticker price and institutional financial aid on the share of low-income students at small liberal arts colleges (SLACs). We use IPEDS panel data from the academic year 2007–2008 through 2021–2022 on 270 SLACs and find that an increase in the published tuition price has a small negative effect on the share of low-income students attending a SLAC. As SLACs rely on heavy tuition discounting by offering institutional aid to incoming students, our analysis suggests that when they increase both their published tuition price and the institutional aid provided by the same amount, it only marginally increases the share of low-income students at the SLACs. This result may provide guidance to SLACs as raising sticking-price tuition and institutional financial aid has a small impact on the share of low-income students.