Freezing tuition at failing for-profit colleges actually hurts students by tricking them into staying at a school that's about to collapse.
SSRN · March 18, 2026 · 6339498
The Takeaway
While price caps seem like a consumer protection, they act as a trap that keeps students 'locked in' to institutions that are hiking prices right before an abrupt shutdown. The study suggests that policies making it easier for students to transfer are far more effective than trying to keep the price low at a dying school.
From the abstract
Between 2015 and 2018, several of the nation's largest for-profit college chains abruptly collapsed, disrupting the education of over 200,000 students. In the year before failure, these schools raised tuition by nearly $1,000, eight times their typical annual increase, while most continuing students stayed put until the day of closure. This striking inelasticity reveals high switching costs that leave students "locked in," unable to escape even as prices spike. After closure, students overwhelmi