This presentation is for a Regression Analysis class complete for an MMR degree at the University of Georgia. The project is to find key attributes of a university or college that can be helpful in explaining or predicting tuition.
2. Problem Statement
Numerous publications provide information on
various institution factors/metrics that students use
to compare colleges/universities and their tuitions.
Given the number of publically available factors, it
can difficult to compare the factors and tuitions
across institutions.
By knowing which factors are may influence
tuition, colleges/universities can determine if their
tuition is fairly valued as compared to their
competition.
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3. Research Objectives
To use publicly available data on universities to
determine which are important predictors of tuition
rates
To determine the how changes in the predictors may
reflect increases/decreases in tuitions
To construct a model that universities may use to
competitively set tuition
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4. Research Design
Sources: 1,238 colleges from U.S. News & World Report's 1995
Guide to Americas Best Colleges and AAUP's (American Association
of University Professors) 1994 Salary Survey.
Variables included in the data set include:
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5. Executive Summary
The base price declines as the category of university changes from
small, medium, and high new student enrollment.
The higher the value in the following, the higher the tuition:
Faculty salaries
Graduation Rate
Percent of faculty with Ph.Ds
Percent of full time students enrolled
Percent of alumni giving (for public colleges only)
The higher the value in the following, the lower the tuition:
Student faculty ratio
Unimportant predictors of tuition are:
Percent of new students from the top 25% of high school class
Fraction of applicants accepted for admission
Private colleges are able to increase tuition at a higher rate than public ones
based on improvements in Student/faculty ratio, Graduation Rate, and % of
faculty with Ph.D.
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6. Some factors affect tuitions at private
institutions more than at public ones
Private institutions see greater tuition benefits for improvement in
graduation rates, faculty with Ph.D’s, and student faculty ratio as
compared to public institutions.
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7. Families are willing to pay higher tuition for
factors believed to offer a better education
Factors for willingness to pay higher tuition in the parents
mind
Higher salaries, more Ph.D’s - - > better instruction in the
classroom
Higher alumni giving - - > alumni valued the experience of
attending the college, so my child will too
Higher graduation rate - -> professors work hard to ensure
students pass
Higher full time students percentage - - > high quality of
student life
Factors that detract from willingness to pay higher tuition in
the parents mind
Higher enrollment - -> my child is just a number
Higher student/faculty ratio - -> my child will not get the attention
he/she needs
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8. A model can help evaluate when tuition is
out of sync with the competition
By applying the dollar figures on the previous
slide, tuition prices can be estimated and compared to
other institutions
Given how well this institution compares to the
others within a similar predicted price range, this
college’s tuition is underpriced - a good value for
students
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9. Limitations and Conclusions
Limitations
Model is time sensitive – uses 1994/95 data
Others factors that could be important to evaluating tuition were
not in the data set
Regional cost of living differences
Reputation
Model could be improved by limiting data to schools of great
similarity
Small liberal arts school only; Law schools only
Allows for a more direct comparison against close competitors
Conclusions
Higher enrollment and high student/faculty ratio are
consideration for lower tuition.
Higher faculty salaries and credentials, higher graduation
rates, higher percentage of full time students, and higher
alumni donations are consideration for higher tuition.
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11. Methodology
All work performed in SAS
Data cleaned of incomplete records
Tests for normality and independence conducted; no data transformation need
Test multicollinearity conducted; none found
Data then randomly split into training set and validation set
Model was trained using the training set. Best set of factors found using “all
possible regression” option
Best 3 models selected based on Adjusted R-squared and Mean Square Error
(MSE)
Final model selected based on the lowest MSE of the best three models using the
validation set
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