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First Page

69

Last Page

97

Abstract

The recent economic recession threatened all traditional revenue sources possessed by colleges and universities. Resultant tuition increases have led stakeholders to demand greater accountability and fostered increased focus upon strategic financing from administrators. This paper examines the economic and political trends that have placed the financial stability of many universities in peril. In this context, rationales for diversification are discussed including portfolio theory and resource dependence theory. A fixed effects regression model was then developed in order to assess the impact of revenue diversification and tuition dependence on institutional revenue at private, non-research colleges and universities, finding that increasing revenue diversification in the years preceding the recession resulted in greater year-over-year total revenue per student.

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