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Paying the Price

Paying the Price
August 27, 2010

“Students will have to dig deeper into their wallets this year to pay for college” has been a popular lede in newspaper articles over the past few months, as many public universities are increasing their tuitions by upwards of 15 percent.

To deal with struggling economies and large budget cuts, governing boards all over the country are giving public institutions the authority to institute large tuition hikes, and many universities are taking the maximum allotment. The Florida legislature set an increase of 8 percent and allowed each university to add up to a 7 percent bump at their discretion. All 11 public universities opted for the maximum 15 percent tuition increase, and many are raising fees by an unprecedented 15 percent as well.

In Alabama, where further reductions are anticipated after the November elections, budget cuts are likely to have a "dramatic impact" on state universities, said Gregory Fitch, executive director of the Alabama Commission on Higher Education. "Even though some of our regional universities are going to be 8 or 9 percent higher, the average is going to be double digits across the board," he said. Alabama A&M University will see the highest tuition increase in the state this year, with a 25.4 percent hike.

Disturbing as they may be to students and parents, tuition increases of this sort have become a familiar part of public higher education's boom and bust cycle, in which legislators and public college leaders respond to big budget cuts by jacking up tuition even higher.

"This is kind of a pernicious pattern we've fallen into," said Patrick Callan, president of the National Center for Public Policy and Higher Education. "The pattern for the last 25 years has been that the biggest increases have come in recessions, because that's when the budget gets cut, but it's also when everybody else is hurting, when personal income is not growing and unemployment is high."

He added that state legislatures know they can cut public college budgets, with the universities making up for it by raising tuition -- something that can't happen in other areas of the economy. That gives the general public an impression that they're being kicked when they're already down, Callan said.

Many colleges and universities have spent the last couple of months setting their fall tuition, but the average nationwide increase won't be known until the College Board's annual tuition report is released in October. Some state systems -- or their individual universities -- have already released their increases, and the aggregate information below is based on publicly available data.

Average Increases in 2010-11 In-State Tuition for 4-Year Public Universities, Selected States

  % Increase
Alabama 13.6%
Arizona 16.1
California 13.2
Florida 15.0
Georgia 10.5
Hawaii 11.6
Louisiana 10.0
North Carolina 16.9
Washington 14.0

Not surprisingly, some of the states with the highest increases are those where university budgets have been hit the worst. Arizona’s three state universities have had their budgets cut by more than 18.5 percent or $230 million since 2007, and their 2010-2011 tuitions will rise by an average of about 16 percent. California has also enacted massive budget cuts, prompting all 10 University of California campuses to raise tuition by 32 percent since Fall 2009. (California State University is raising its tuition by 5 percent, after a 32-percent increase in 2009.)

The University of North Carolina system is reeling from a $142-million cut this year, on top of $575 million of reductions over the past three years. As a result, the legislature allowed massive tuition increases this year, and tuition at all state universities is rising an average of about 17 percent, and on some campuses by more than 20 percent.

“The university cut administrative expenses last year by 23 percent and abolished nearly 900 administrative positions -- I think we’ve cut the administration to the bone and we had to do something to protect the quality of our education,” said Ernie Murphrey, CFO for the UNC system. He added that the tuition increase will help to offset this year’s cuts to the operating budget.

In Georgia, research universities will see an increase of $500 in tuition, or 16.5 percent, which is expected to generate $80 million to help offset a $227-million state reduction. “It’s a heftier increase than we have seen at that level,” said John Millsaps, a spokesman for the University System of Georgia Board of Regents. “Like every other state we are seeing pretty significant budget reductions to state appropriations, but we obviously have more and more students who are knocking on the doors. It’s a challenge to maintain the quality level with fewer resources.”

Georgia’s universities have also been asked to submit plans for 4, 6, and 8 percent reductions for the current year, Millsaps said, and in the past, they have had to make the highest-level midyear reductions. He added that if the universities were required to make a 10 percent cut to their proposed 2012 budgets, they would fall below 2007 fiscal year appropriations, requiring them to use less money to serve a projected 60,000 more students than in 2007.

Millsaps said that the rising cost of attendance didn’t seem to be turning people away from Georgia’s universities -- which still have among the lowest tuitions in the country -- but recent research has shown that more than half of incoming freshmen nationwide in 2009 were concerned about how they would finance their educations, and an all-time high of 46 percent said that cost was a very important factor in choosing which university to attend.

“Instead of going to a place they’re most qualified to go to and fits their educational goals, they’ll make their decision based on price,” Callan said, describing a phenomenon he called “trading down.” He added that higher education has become the “gate to the middle class” but that the rising prices make it increasingly hard for students to attend and graduate. “We’re digging ourselves into a deep hole and increasing the mismatch in what American society needs.”

Nonetheless, the skyrocketing rates have bypassed some states even this year. While many universities’ increases average between 5 and 10 percent, some states – even those with large universities and large budget cuts -- are maintaining more modest increases. The percentage of state money that supports the University of Texas system budget is relatively small compared to other states, and as a result UT is raising its tuition by an average of only 4.1 percent. In-state students in Missouri, West Virginia, and at New York state and city universities will not see an increase in tuition this year, and it will increase less than 5 percent for out-of-state students.

“When [Missouri Gov. Jay Nixon] came into office he promised that he would make higher education a priority, and he held that promise even though he has had to decrease state allocations to many other areas,” said Mary Jo Banken, a spokeswoman for the University of Missouri. For the 2010 fiscal year, Nixon promised to cut university state allocations only 6 percent if the universities promised not to raise their tuitions. Banken said that increasing enrollment has brought in enough revenue to make this a feasible solution.

Average increases in 2010-11 In-State Tuition at 4-Year Public Universities, Selected States

  % increase
Maine 4.8%
Maryland 3.0
Minnesota 4.5
Missouri 0
Montana 1.5
New York 0
West Virginia 0
Wisconsin 5.0

 

 

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