All of higher education institutions in China have adopted cost-recovery policy since
1997. This study analyzes the impact of college costs, expected return to education and
family education and financial background on the probability of individual enrollment in
higher education in China, especially in urban areas. The data are from Urban Household
Survey of the State Statistical Bureau of China, which was collected in August 1999.
Using price-response measures, this study examines the cost sensitivity varying among
different income groups. After that, this study analyzes the willingness to pay for higher
education and financial resources for students' educational expenditure by using a college
student survey data, which was collected in December 1999. This study finds that the
main part of financial resources is coming from family while students are learning at
college and the gap of willingness to pay among different income groups is becoming
larger and larger with the increase in tuition. Finally, the conclusions are drawn and
policy implications are discussed, aimed at informing enrollment projections and tuition
policy choices in Chinese higher education system.