Focusing primarily on students with above-average ability, this study tries to measure the extent to which these students, or subgroups of them, are discouraged from applying to high-priced institutions by purely financial considerations. Questionnaires were developed and mailed to approximately 8,000 students selected randomly from the list of students who had taken the PSAT/NMSQT (Preliminary Scholastic Aptitude Test/National Merit Scholarship Qualifying Test) and were entering college for the first time in the fall of 1976. Of the more than 2,800 questionnaires returned, 2,545 were used. A general model was used to explain why students in particular income/ability categories apply to institutions in given price/selectivity groupings. More specific models were developed to explain how individual students decide whether to apply to a particular group of institutions, using academic ability, family income, and other characteristics of the student as explanatory variables. Results show that students with above-average academic ability are less affected by the higher price of independent higher education than they are by their perceptions of the academic reputation of the institution. It was found that these conclusions generally apply to the different subgroups of students as well as the group as a whole. The appendices contain the regression results, a description of the analytical techniques, the survey questionnaire, and a list of the geographical regions covered by the survey. (SPG)