Cost of higher education: For-profit universities and online learning

The Higher Education Reauthorization Act (HERA) of 2006 eliminated so called the “50 percent rule” that prohibited students enrolled in post-secondary institutions offering 50% or more of their courses exclusively online to receive any federal financial aid (Title IV aid). In this paper we study the net cost of attending colleges and additionally test for so-called “Bennett” hypothesis that assumes that the Title IV aid, that became available after elimination of 50% rule, might have been captured by institutions that could increase tuition and fees and lower the amount and availability of the institutional grants to students. We study the net costs, tuition and fees, and institutional aid for students who study exclusively online, students in for-profit colleges in which exclusive online education is more heavily concentrated, and students who study exclusively online at for-profit universities before and after the elimination of 50% rule. We find a partial support for Bennett hypothesis for profit, but not exclusively online students.