Present Value Analysis of Pennsylvania Tuition Subsidies
Open Access
Author:
Zalesky, John Edward
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Chris Muscarella, Thesis Supervisor James Alan Miles, Thesis Honors Advisor
Keywords:
tuition education university
Abstract:
This paper answers the question does Pennsylvania’s investment in Penn State students pay off? This analysis is done by looking at the tuition subsidy (out-of-state tuition less in-state tuition) and comparing the incremental cash flows to Pennsylvania in the form of additional income taxes and sales taxes on a present value basis. This will be affected by the retention rate of in-state graduates, tax rates, college major, and discount rate. An “average” student is the basis of the calculation (e.g. an average high school student versus an average Penn State Student.) In most cases the tuitions subsidy did not yield a positive net present value.
