When Investor Incentives and Consumer Interests Diverge: Private Equity in Higher Education

• 成果类型: Article
• 署名作者: Eaton, Charlie; Howell, Sabrina T.; Yannelis, Constantine
• 署名单位: University of California System; University of California Merced; New York University; University of Chicago
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhz129
• 发表日期: 2020
• 页码: 4024
• 关键词: NOT-FOR-PROFIT; HOSPITAL OWNERSHIP; labor-market; buyouts; FIRMS; decisions; QUALITY; rates

摘要

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.