Empirical Research
Instructional Costs and Tuition Revenues
Reviewed By David A. Yamoah
Volume 5 - Issue 3
Oct 17, 2007 - 8:22:11 AM

Concern about the cost of higher education has resulted in demand for accountability in the use of public funds. Funding for most public higher education breaks down into two major parts, the Enrollment-based support and the Performance or Incentive-based support. This paper examines Enrollment-driven support, and attempts to establish a relationship between enrollment-based receipts and costs. Linear relationship is established between tuition revenues and instructional costs within profit maximization framework. The linear model was then tested empirically based on data on New Jersey public higher education institutions, and using the least squares estimation techniques. The results suggest that a strong relationship exists between tuition revenues and instructional costs.