The Expected Monetary Value of a Student: A Model and Example

ABSTRACT

The authors introduce a model for estimating the amount of revenue a typical student will bring to an institution of higher education. The model uses event history analysis to analyze the length of time typical student will remain enrolled, accounting for the possibilities that the student will drop out, be disqualified by the university, graduate “on time,” or even take more time than the traditional eight semesters to complete a degree program. Once the pattern of enrollment has been estimated, it is a relatively simple matter to estimate the revenue impact of a student during a specific semester by multiplying the per-semester tuition rates by the probability that a student will be enrolled that semester. Finally, the discounted present value of the individual semester revenues provides an estimate of a student's revenue impact over the life of his or her academic career.

KEYWORDS:

• Monetary value of a student
• survival analysis
• event history analysis
• survival rate
• hazard rate
• censored cases
• student retention