Interstate Commerce

With budgets tightening, public universities may be inclined to recruit more out-of-state students for increased revenue.

February 12, 2009

Ask an admissions director at a public university about recruiting out-of-state students, and you’re likely to hear a lot about geographic diversity goals and becoming a nationally recognized institution. While these are good reasons to target non-state residents, higher education experts say colleges may be increasingly inclined to recruit across state borders just to make ends meet.

For some colleges, like the University of Vermont, out-of-state students have always been a healthy part of the enrollment mix. About 66 percent of Vermont’s freshmen came from out of state this year, continuing a practice that is designed in part to make up for relatively low state funding levels. But as the economy softens, others may follow suit. Institutions in states like Florida and Ohio are stepping up efforts to lure non-state residents, who are likely to bring both strong academic credentials and a willingness to pay higher tuition rates.

“It’s the miracle of loaves and fishes,” said Jane Wellman, who heads the Delta Project on Postsecondary Education Costs, Productivity, and Accountability. “You get a better admissions profile and you get a lot of dough.”

About 16 percent of first-time undergraduates at public colleges across the nation come from out of state, according to the U.S. Department of Education. At a number of state universities, however, out-of-state students make up more than 30 percent of the freshman class.

While it may be tempting to bolster non-resident enrollment, doing so is full of potential political perils. Lawmakers tend to get huffy about state-funded institutions providing education to students who seldom pay state taxes, even if the colleges are pursuing those students only in response to declining state revenues.

A University of California regent recently suggested the system move more aggressively to recruit out-of-state students, only to have the system’s president quickly distance himself from the remarks.

“[President Mark Yudof] made it very clear that there are absolutely no plans at this point and no proposal to in any way change [enrollment ratios],” said Ricardo Vázquez, a spokesman for Yudof’s office. “That’s not something that is being entertained or is being proposed in any way at this particular time.”

It may not have been proposed, but it’s already happening -- at least to some extent. Between 2006 and 2007, the university’s total non-resident undergraduate population – excluding international students – grew by 4 percent, or 256 students. By adding 125 non-resident students to its roster in 2007, California’s Los Angeles campus grew its out-of-state undergraduate enrollment by 10 percent over the course of a year.

Revenue Seldom Mentioned as Motivator

Many college officials bristle at the suggestion that non-resident recruitment is part of budget balancing. At the University of Michigan, where about 35 percent of undergraduates are from out of state, officials view the potential revenue generation of these students as less important than the diversity and academic credentials they bring, according to Phil Hanlon, vice provost for academic and budgetary affairs.

“The financial reasons are very secondary,” he said.

Even so, there’s little question that non-state students are a boon to Michigan’s bottom line. Michigan residents pay $11,037 in tuition and fees in their freshmen and sophomore years, compared with $33,069 for non-state residents. Furthermore, Michigan has a policy of meeting full demonstrated financial need for in-state undergraduates, but doesn’t extend that policy to those who come from other states. As a result, 80 percent of state residents receive some form of financial aid -- compared with 52 percent of non-state residents.

The University of Michigan has seen state revenues fall by about $100 million in inflation-adjusted dollars over the last six years, but has not dramatically changed its residency mix in response, Hanlon said. That said, there are more challenges on the horizon. Not only is the state facing a $1.6 billion budget deficit, but Gov. Jennifer Granholm is pressing universities to hold tuition at current levels for in-state students. While Hanlon doesn’t see increasing the number of out-of-state students as a quick solution to revenue woes, he acknowledged “as part of a [long term] competitive strategy, I’m sure we would look at residency mix.”

In Ohio, where a tuition freeze has been in place for the last two years in exchange for increases in state funding, officials at Kent State University are actively stepping up efforts to recruit out-of-state students. Last semester, the university increased its number of traveling admissions counselors from two to seven, the university’s student newspaper reported.

Miami University’s campus in Oxford, Ohio, has seen out-of-state enrollments grow from 30 percent of undergraduates in 2000 to 36 percent in 2008, but Provost Jeffrey Herbst disputes any notion that finances are the driver. Furthermore, he says the university won’t look to bolster out-of-state enrollment numbers to make up for any potential losses in revenue if the university faces budget cuts.

“It’s our general philosophy not to shift the cost on to out-of-state students, because I don’t think it would be right,” he said.

Elsewhere in Ohio, the line between in-state and out-of-state tuition is blurring substantially. Youngstown State University, which is about 10 miles from the Ohio/Pennsylvania border, recently announced that it would lower its out-of-state tuition surcharge from $2,692 to $200 for students living in the eight bordering counties along the Ohio/Pennsylvania border.

It’s all but inevitable, however, that some cash-strapped colleges will look to raise revenues by increasing out-of-state enrollments, according to David Shulenburger, vice president for academic affairs at the National Association of State Universities and Land-Grant Colleges.

“There are tons of motivations that go into it,” Shulenburger said. “In general -- now this isn’t always true -- [but] the general rule is out-of-state tuition is priced at a point that it pays the full cost of instruction. In-state [tuition] generally pays one quarter of the cost of instruction, and when financial times are tough I’m sure schools have to at least think about that revenue. Again, the motives are mixed … but right now finances probably have a lot to do with it.”

Florida Atlantic University, an institution of about 26,000 students with a main campus in Boca Raton, is looking to expand its out-of-state recruitment efforts, in part to deal with significant budget cuts that higher education has taken in recent months. Barbara Pletcher, director of admissions, says the university has been particularly active in the northeast.

“I wouldn’t say it was completely financial, but I believe it did play a part,” Pletcher said. “We do, of course, make more money from students who are out of state than in state, but we do like the diversity [of out-of-state students as well].”

Currently, only 6 percent of undergraduates at the university hail from outside Florida.

Like several other states, Florida has a limit on the number of out-of-state students that can attend its public universities. The state mandates that no more than 10 percent of the undergraduate population across the 11-campus system be non-resident. In 2007, 5 percent of the students in the system were from out of state.

Non-residents Flock to Vermont, Colorado

While some states place strict limitations on non-resident enrollments, others have tacitly encouraged public institutions to go after students from elsewhere. In Vermont, for instance, out-of-state students are the backbone of the state’s lone land grant institution.

“To create a major research university, you have to have … both revenue and a student base, and we don’t have either one in Vermont,” said Chris Lucier, vice president for enrollment management at the University of Vermont.

Vermont admitted 71 percent of in-state first-year applicants this year, but about 75 percent of the enrolled class of 2,468 students ended up being from out of state.

There are a number of factors that contribute to Vermont’s enrollment mix. For in-state students, Vermont’s tuition is still a cringe-inducing $11,340 on average, among the highest in the country. Compared with other states overall, the state of Vermont's average tuition and fees for public four-year universities are the highest in the nation, according to the College Board. In a rare offer, however, students in Vermont are permitted to carry their in-state financial aid to other states, and many take advantage.

As for out-of-state students, tuition is nearly $29,700, and 28 percent of those students pay full freight with no aid. So why are nonresidents willing to shell out that kind of cash? One factor is location.

“Burlington is a great place; that does not hurt us,” Lucier said. “We sit on Lake Champlain, and one of the sayings is ‘You can do it all.’ You can boat, you can ski, you can mountain climb.”

The University of Colorado at Boulder has a similar draw for lovers of the great outdoors. A skiing destination for many, Colorado sells itself without too much effort.

“This is an institution that has never had to work hard to recruit nonresident students,” said Bronson Hilliard, spokesman for Colorado.

Colorado had its first class with more than 50 percent non-residents in 1992, prompting the Legislature to mandate that the university's undergraduate population be 55 percent in-state students on a rolling three-year average. In this year’s freshman class, 47 percent of students were from out of state; that’s the largest non-resident freshman enrollment since at least 1999, the earliest year for which Colorado maintains online data.

As with Vermont, Colorado officials point toward relatively low levels of state funding as one of the reasons for a large out-of-state enrollment. Several years ago, the Legislature granted Colorado “enterprise status,” a designation that allows a university to operate as quasi private when less than 10 percent of its budget comes from state sources.

The non-resident enrollment at Colorado has unquestionably helped fill the budget gaps left by the state. For every 100 out-of-state students that come to Colorado, the institution generates an extra $1 million, according to university officials.


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