BY ALEX HARTLEY
Published February 11, 2010
There have been many suggestions for what the University should do to counter shrinking state support. The University must strike a delicate balance between remaining competitive with its peers and making sure it serves the people it is supposed to serve. I believe that Michigan should take as its financial model... itself. More specifically, it should look at its graduate and professional schools. It should adopt the tuition model of the graduate school for the undergraduate program, in which the difference between in-state and out-of-state tuition is not nearly as disparate as the undergraduate tuition model.
If tuition for in-state students were increased to $23,000 from the current $11,659 (for lower division students) and out-of-state tuition were decreased from $34,937 (for lower division students) to $29,000, tuition revenue would actually increase dramatically. Out-of-state students pay one and a half times the actual cost of their education, thus subsidizing in-state students, who underpay their costs. But there are more in-state than out-of-state students attending the University, so out-of state-students don't pay enough to offset the cost difference.
The idea of lower in-state tuition comes from the state's assumption that residents pay enough taxes to cover the difference in cost. But if this was ever true, it certainly isn’t any longer. If both sets of students were roughly covering the costs of their education, tuition revenue would increase dramatically.
An argument that could be made against this proposal is that it would price out in-state students, who tend to not be as wealthy as their out-of-state counterparts, or give the wealthier in-state students incentive to go elsewhere. However, the University recently adopted a plan to meet the full demonstrated need of in-state students, so no matter what the tuition is, in-state students will pay only what they can afford. The in-state tuition increase would affect only those who can afford to pay more. And tuition for in-state students would still be much less than what it is at any comparable private school. For example, Northwestern charges approximately $38,000 a year in tuition, and Stanford charges approximately $37,000.
Currently, the University receives about two-thirds of its operating costs from tuition, so if it could increase its tuition revenue, it could also increase the amount of money it has to give out in aid. Right now, lower division LSA out-of-state undergrads pay about $34,000 a year, and in-state pay lower division undergrads pay about $11,000 a year. Taking that as the average tuition, with about 9,000 out-of-state students and 17,000 in-state students max., tuition money is roughly $493 million. Under this new plan, all other things being equal, tuition revenue would jump to $598 million. To put that into perspective, with the money the school would make from implementing this plan, it would have enough money to pay the entire tuition of over 6,000 in-state students and still break even. While only some of this money would be used for financial aid, the rest could be used to make up the money that the state is thinking of cutting from our budget.
If both sets of students paid roughly the full cost of their education, there also wouldn’t be tension between in-state students and out-of-state students. Many out-of-state students feel uncomfortable about paying three times the amount for the same education. And they have much less prospect of financial aid, because most aid goes to in-state students. In-state students feel that out-of-state students are much wealthier than them and also feel odd about paying so much less for the same education, knowing that other students are paying much more.
Also, with the state giving less support, the University may have a tendency to accept higher paying out-of-state students, which would be bad for in-state students and could hurt them in terms of acceptance. The University is trying to cope with falling state support, and one of the most effective ways it can do that is by accepting higher paying out-of-state students. However, this isn’t fair to qualified in-state students, who might deserve a spot here but might not get it because their spot can be filled with a high-paying out-of-state student. Achieving rough parity in tuition will largely nullify that issue.
While this proposal may seem radical, and on the surface it might seem to hurt in-state students, in fact it will help them. While some who can afford to pay more will pay more, those who can't afford to pay more will receive more aid. The school will have much more money to give out in aid and use for operating costs, and any bias toward accepting high-paying out-of-state students will be mitigated, while out-of-state students will actually be paying less. This is a fair solution for everyone.
Alex Hartley is an LSA freshman.