The Education Premium: An Analysis of the Costs and Benefits Associated with Private and Public Higher Education

Abstract

This thesis explores the premium that private institutions charge students relative to public institutions and also analyzes whether or not paying the premium for private education is worth the extra cost. In addition to exploring the premium, this thesis also explores why enrollment is growing at a more rapid rate at private institutions relative to public institutions. Through analyzing macroeconomic indicators and trends in higher education, this thesis also explores the differences between the private and public higher education. To avoid drawing generalized conclusions for trends on a national level, this thesis is limited to an analysis of trends and developments in Texas. The primary goal of this thesis is to explore the composition of the higher education premium between private and public institutions through a detailed case study and net present value (NPV) analysis of one private and public institution in Texas. An examination of the present value of the costs to attend college and of the relevant qualitative factors will be used to determine if the cost of a private higher educational experience is worth the initial explicit and implicit costs to the prospective student.