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Much Hyped Tuition Plan Falls Flat

Much Hyped Tuition Plan Falls Flat
February 17, 2006

Increasing in-state tuition by thousands of dollars at Miami University of Ohio to match out-of-state tuition in fall 2004 -- while also providing extra aid to cover the increases -- was supposed to concurrently increase the “perceived value” of the institution. “[H]igh tuition makes people think a school has a lot to offer,” James C. Garland, president of Miami University, told USA Today before the increases went into effect. Miami’s approach generated extensive publicity and was hailed as a new model for public higher education. That fall, Garland’s argument seemed on target with the university receiving a record 15,000 applications and a 4 percent increase in freshman enrollment.

However, even with automatic scholarships of up to $12,710 this year to help in-state students make up the difference in cost, there are more empty freshman beds today than in any year since before 1999. Some financial and enrollment experts say the tuition experiment is partially to blame. Administrators, meanwhile, maintain that internal mistakes combined with a state-ordered tuition cap inadvertently made an important part of the plan -- substantial scholarships for low-income students -- ineffective at boosting their enrollments since firm tuition estimates could not be provided until much later than usual.

The plan was intended to help the institution become more affordable by giving the university more flexibility in the disbursement of state subsidy dollars. “Our goal is to make a Miami education more accessible to families,” Garland said upon launching the changes.  “We want to improve the ability of Ohioans to afford Miami and encourage more top Ohio students to stay in Ohio.” Garland also said that the net costs for in-state students would not go up, indicating that “Ohioans will pay the same as under the old system.”

Based on the numbers of incoming students who confirmed by May 13 last year, which was the most recent data provided to Inside Higher Ed from Miami’s communications office, there was a 13 percent decrease in in-state enrollment in 2005 from 2004 and a 10 percent decrease in out-of-state enrollment. Richard Little, a spokesman for the university, said that the drops for both in-state and out-of-state students settled at just over 8 percent by last fall. There was also an 8 percent decrease in the number of freshmen with the “highest need” for financial aid support in 2005 and a 5 percent drop in the wealthiest students with “no need,” said Little.

These issues are problematic for administrators because one of their selling points of the plan was that a “private-school model” could allow colleges to charge wealthier students more and use the money for extra aid to low-income students, and, in turn, help bolster their numbers. The decrease in out-of-state students is also cause for alarm, since Garland said the university would largely depend on its out-of-state students paying full “sticker price” to subsidize in-state students.

Richard Hesel, a principal with the Art & Science Group enrollment consulting firm, said that pricing research has proven that “sticker shock” can be a big indicator for why students would choose not to attend a public institution with as in-state tuition of over $22,000, as Miami now has. “We see these financial and psychological barriers,” he said, noting that Miami has a reputation of being pretty affluent. “That perception is deep, especially among low-income families.”

According to the Ohio Board of Regents, in 2005, Ohio residents’ average tuition at 4-year public institutions, not including Miami’s tuition in the calculation, was $7,301. Headcount data indicates that there was no across the board decline in enrollment in the state. In fact, several public universities had preliminary headcounts that illustrate increasing enrollment trends.

Ultimately, at Miami, there was a 9 percent dip in the number of enrolled freshman (down from approximately 3,490 to 3,160), even though the university accepted 2 percent more total students in 2005 over 2004. The largest declines occurred in the arts and sciences (down over 12 percent) and the fine arts (down over 16 percent), despite an up enrollment market nationwide in those fields.

Patrick Callan, president of the National Center for Public Policy and Higher Education, said that these enrollment numbers are evidence of “poor execution of a poor idea.”  “Everyone thought that high tuition, high aid programs worked well until we heard from privates about their issues with access for low-income students,” said Callan. “It would be a serious mistake for schools to look at the Miami situation and conclude that this is the best way to help low-income students.” Last year, Callan spoke out against ideas by some University of Washington administrators to take a similar route. There are currently no proposals on the state legislature’s docket that would set the wheels in motion for such a plan.

Garland said Wednesday that he did not expect that enrollment numbers would decrease in 2005 for in-state or out-of-state students. “We incorrectly predicted the fraction of students we should have admitted,” he said. “It was a mistake.”    

“Yes, it sounds like it was a pretty big miscalculation,” reflected Hesel.  “Given the company that they’ve tried to move into, one would have expected increases at this stage.”

Garland was adamant that the tuition plan was not the reason for the enrollment decrease. In December, he wrote a Washington Post column, advocating that “all or part of each public four-year university” should be turned into a private, nonprofit corporation.

“There is not a shred of evidence to suggest that the tuition plan has been anything but a success,” he said Wednesday.

“I’m not surprised that Miami leaders are deeply convinced that they’re right,” said Callan. “They really think they’re reinventing the financing of higher education. But what they’re really doing is creating a structural dependence without the benefit of the large endowments of most privates.”

Charles Knepfle, assistant provost and director of student financial assistance at Miami, noted that a statewide tuition cap that passed the legislature last June forced the university to change its tuition after it had already been set in February. Therefore, some students had to choose to enroll before they actually knew what the tuition would be at the university. They also were left in limbo for months regarding their scholarship amounts, he said.

“There’s no doubt that the tuition plan could have been cloudy in students’ minds,” added Knepfle. “And the cap exacerbated that problem.”

Michael Mills, a former director of admissions at Miami and now an associate provost for enrollment at Northwestern University, said that some people have negatively assessed the program because it is counterintuitive. “But increasing tuition allows a lot of freshman to get better financial aid deals,” he said. “Attitudes still need to evolve to understand that.”

Mills said that the dip in enrollment so early in the life of the tuition program is “problematic.” “If this becomes perceived as a failing program, I think it would be a travesty,” he said. “It hasn’t had sufficient time to prove itself.”
                    

 

 

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