When Investor Incentives and Consumer Interests Diverge: Private Equity in Higher Education
We study how private equity buyouts create value in higher education, a sector with opaque product quality and intense government subsidy. With novel data on 88 private equity deals involving 994 schools, we show that buyouts lead to higher tuition and per-student debt. Exploiting loan limit increas...
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| Veröffentlicht in: | The Review of financial studies 2020-09, Vol.33 (9), p.4024-4060 |
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| container_issue | 9 |
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| container_title | The Review of financial studies |
| container_volume | 33 |
| creator | Eaton, Charlie Howell, Sabrina T. Yannelis, Constantine |
| description | We study how private equity buyouts create value in higher education, a sector with opaque product quality and intense government subsidy. With novel data on 88 private equity deals involving 994 schools, we show that buyouts lead to higher tuition and per-student debt. Exploiting loan limit increases, we find that private equity-owned schools better capture government aid. After buyouts, we observe lower education inputs, graduation rates, loan repayment rates, and earnings among graduates. Neither school selection nor student body changes fully explain the results. The results indicate that in a subsidized industry, maximizing value may not improve consumer outcomes. |
| doi_str_mv | 10.1093/rfs/hhz129 |
| format | Article |
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| language | eng |
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| source | Jstor Complete Legacy; Oxford University Press Journals All Titles (1996-Current); EBSCOhost Business Source Complete |
| subjects | 1998-2011 Anlageverhalten Dienstleistungsqualität Hochschule Hochschulfinanzierung Private Equity Studierende USA Übernahme |
| title | When Investor Incentives and Consumer Interests Diverge: Private Equity in Higher Education |
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