Koch%20An%20Economic%20Analysis%20of%20Textbook%20Pricing%20and%20Textbook%20Markets

Koch%20An%20Economic%20Analysis%20of%20Textbook%20Pricing%20and%20Textbook%20Markets

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ACSFA College Textbook Cost Study Plan Proposal Dr. James V. Koch September 2006 AN ECONOMIC ANALYIS OF TEXTBOOK PRICING AND TEXTBOOK MARKETS Between 1986 and 2004, textbook prices rose 186 percent in the United States, or slightly more than six percent per year (GAO, 2005). Meanwhile, other prices rose only about three percent per year (GAO, 2005). What difference has this made? When textbook price increases are combined with the seven percent average annual increase in tuition and fees over the same time period (GAO, 2005), this has caused the overall price of higher education to increase significantly and has posed serious financial problems for the students and parents who must meet these burgeoning costs. These financial stresses have evidenced themselves in two ways. First, over time, student access to higher education has declined and second, students have taken more time to complete their programs of study. CALPIRG (2005) found that students at California public universities spent an average of $898 on textbooks in the 2004-2005 academic year. If textbook prices have continued to rise at six percent per year, then this expenditure will rise to $1,009 in the 2006-2007 academic year and constitute 6.1 percent of the estimated annual cost of education for a resident student at a four-year public university (College Board, 2005). Students coming from lower income families have suffered the most. As noted, textbooks now will constitute a $1,000 item annually for many full-time students and this is especially burdensome to low-income students. Financial aid expert Thomas G. Mortensen reports that whereas about one-half of all students coming from families with incomes in excess of $90,000 annually earn a bachelor’s degree by age 24, fewer than five percent of students coming from families earning less than $35,000 annually do so (Kahlenberg, 2005). Textbook costs, of course, are not the only cause of these differentials, but it is apparent from student behavior that they are a contributing factor. Rising textbook prices also have placed increasing demands on the resources of stakeholders such as the federal government and colleges and universities that provide need-based financial aid to students. Since federal financial aid formulas typically include some measure of the cost of textbooks, textbook price increases have forced Congress either to appropriate more money to financial aid and/or to ration scarce available financial aid funds among an increasing large number of students. Both things have occurred, but the end result still has been that need-based financial aid per eligible student has fallen far behind both the rising cost of higher education. Why have textbook prices been rising so rapidly?
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Koch%20An%20Economic%20Analysis%20of%20Textbook%20Pricing%20and%20Textbook%20Markets

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