Representatives from Eastern Michigan University and Oakland University testified Thursday before a joint meeting of the Michigan House and Senate Appropriations subcommittees on higher education to explain their tuition hikes for the current year, which, unlike the University’s, exceeded state limits.
Though University officials were not involved in Thursday’s hearing, conversation about tuition caps and the incentives that drive them do have an impact on the University’s process for setting tuition rates.
EMU raised tuition by 7.8 percent and Oakland University raised tuition by 8.48 percent, above the 3.2-percent limit set by the state as a condition of receiving part of a 2-percent increase in state funding. The University raised tuition this year by 2.7 percent for in-state students, consistent with the cap. It has not exceeded it in past years either.
Performance-based funding for all universities, tied to both caps on tuition and six other aspects of performance — including six-year graduation rates, degree completion in critical areas and administrative costs — have been in place since 2012.
Because their tuition rates exceeds state limits, EMU and Oakland are forfeiting $1 million and $1.2 million, respectively, in state incentive funding. However, the hikes will earn EMU $10 million this year in additional tuition revenue. Oakland will make an extra $12 million in tuition.
Several members of the committees asked EMU President Kim Schatzel and Oakland University President George Hynd for their opinions regarding the performance-based standards and the tuition cap.
The members asked whether the presidents saw the cap as positive reinforcement or punishment and what they thought the subcommittee could do to prevent such substantial tuition hikes from becoming a recurring trend.
Hynd said the performance metrics are good ones, but he thinks the tuition cap is restrictive.
“They are the ones (college presidents) might be able to have an impact on, so I think that makes sense,” he said. “The tuition restraint can be viewed as either a carrot or a stick, and I think that’s probably worthy of some discussion.”
Schatzel said EMU has not increased its tuition rate in years because her school is committed to keeping college affordable and that the tuition remains comparatively low.
“In 2005, our tuition was roughly equal to that of our peer institutions,” she said. “Ten years later, our tuition is 5 to 13 percent lower than our peers. With the recent tuition increase, Eastern remains 13 out of 15 in tuition costs among Michigan’s public universities.”
Schatzel said this shows EMU’s financial well-being and has kept expenses low so that it has not had to increase tuition substantially every year.
“At Eastern we clearly understand that approximately 80 percent of every dollar we spend comes from the pockets of our students, and the remaining 20 percent comes from the taxpayers of the state of Michigan,” she said.
She also noted that freshman enrollment has risen rapidly at EMU, and that the school is dedicated to providing students with the best resources. However, she said, it is difficult to do that at a university that has lower financial reserves than many other public institutions in the state without increasing tuition.
Schatzel said the majority of students — 87 percent — at EMU are Michigan residents, which, she said could explain why the school may have fewer financial resources than other schools.
She used the University of Michigan as an example to prove this point, noting 45 percent of its student body is from out of state and thus pays significantly higher tuition than the majority of students at EMU.
Hynd echoed Schatzel’s sentiment and said Oakland wants to meet students’ priorities and invest in their educations, but doing so on a limited operating budget is a challenge.
“Neither the university nor the state has generated sufficient resources to meet the needs of our students,” he said. “Oakland’s all-in tuition rates have long priced below the comparable rates of our state peers. Although we are grateful and encouraged to see the state of Michigan has begun to reinvest in higher education through increased appropriations, the fact is that historically, Oakland has been underfunded.”
He said Oakland spends less per student than do most public universities in the state because the school receives less state funding than the statewide average.
“Oakland has done its best to keep tuition increases as manageable as possible for students and certainly their families,” he said. “These efforts have kept us within the bottom half of Michigan public universities when it comes to the all-in cost of education.”
State Rep. Mike McCready (R–Birmingham), co-chair of the House Appropriations subcommittee on higher education, said the two subcommittees would meet again to further discuss these issues.