State funding trends impact affordability efforts

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By Allana Akhtar, Daily Staff Reporter
Published February 25, 2015

Following statewide elections in which higher education was a point of debate, this article is the third in a series examining the changing landscape of higher education funding in Michigan, and what those changes mean for four-year universities.

In his opening remarks at last Thursday’s Board of Regents meeting, University President Mark Schlissel thanked Gov. Rick Snyder (R) for recommending a 2-percent increase in state appropriations for higher education in fiscal year 2016.

“We appreciate the governor’s support for higher ed, especially at a time when the state must make difficult choices regarding spending,” he said.

However, even with the increase — which totaled a 1.9-percent funding increase specifically for the University — state appropriations are nowhere near where they used to be at their peak.

This year, state appropriations made up 9 percent of the University’s operating budget, excluding the University of Michigan Health System. In contrast, during the 1960s, state appropriations covered 78 percent of University expenses.

Over the course of half a decade, the state of Michigan has severely limited its higher education funding. In an effort to fill the gap, the University has resorted to other sources for revenue — namely, raising student tuition.

Given a growing nationwide conversation on the rising cost of college, these increases have prompted discussion at the University on how to keep college affordable and accessible to all students, even while the institution is steadily losing state monetary support.

History of tuition hikes

During June’s Board of Regents meeting, the board unanimously agreed to increase this year’s tuition by 1.6 percent for in-state undergraduate students and 3.4 percent for out-of-state undergraduate students.

Before casting her vote, Regent Andrea Fischer Newman (R) asked if there was a point when the University could stop increasing its price tag.

“It concerns me that many people have asked for a higher appropriation from the state every year, and the state is starting to respond, and I appreciate that,” Newman said. “But, I think we need to be responsible stewards of that increase. So I wonder why we have to have an increase in tuition when the state is stepping up to the plate.”

University Provost Martha Pollack responded at the meeting, saying that though the University is invested in keeping costs low for students, it must raise revenue to continue hiring top faculty and updating campus infrastructure.

“We do work extremely hard … but we also really need to protect the excellence of the University,” Pollack said.

This year’s tuition increase follows the regents’ 2013 decision to bump tuition by 1.1 percent, the lowest hike in 29 years.

According to financial reports from Tim Slottow, the former University chief financial officer, the University’s tuition hikes have been among the lowest in the state and in the Big Ten over the past several years.

“Tuition and state appropriations are the primary sources of funding for the University’s academic programs. There is a direct relationship between the growth or reduction in state support and the University’s ability to restrain tuition fee increases,” Slottow stated in the 2006 financial report, while still in the role of chief financial officer.

In response to the University’s effort to keep tuition percent changes low, Snyder awarded the campus an additional $1.1 million in state funding, the third-largest state grant in 2012.

Regardless of efforts in recent years, however, the University has increased its tuition by at least 1 percent, and sometimes more, each year since 2002.

A decade ago, the Board of Regents approved a 12.3-percent hike in tuition for in-state students and a 6.9-percent raise for out-of-state students — the largest percentage increase since the turn of the century at the University.

“This is unprecedented in the history of the University,” then-Provost Paul Courant told the Daily.

Though each subsequent increase in tuition was 5 percentage points or less, overall the University’s base tuition for those enrolled in the College of Literature, Science and the Arts has increased 60 percent for in-state students and 55 percent for out-of-state students from 2005 to 2014.

In an interview with the Daily, Cynthia Wilbanks, University vice president of government relations, said tuition rates have a direct relationship with state funding. Rising tuition, she said, can be explained by dwindling state funding.

Over the past decade, state appropriations to the University have declined by 40 percent on a per-student basis, when adjusted for inflation.

“I think the state had a much greater role in funding higher education prior to this last decade,” Wilbanks said.

According to information provided by the office of the University’s vice president for global communications and strategic initiatives, tuition rates vary somewhat between different colleges within the University, credit-hour loads and class standing.

Tuition money goes to the general fund and helps pay for instruction, financial aid, advising and libraries. It does not pay for athletics, the health system, construction or housing.

In an interview last week, University Regent Denise Ilitch (D), who has voted against most tuition increases over her tenure on the board, said she believes it is extremely important to keep higher education affordable for all Michigan residents.

“I think that it’s extremely important that we make higher education accessible to our Michigan residents and to make sure that it’s affordable to all, and not just people of means,” Ilitch said.

Though pleased at the slowing rate of tuition increases, Ilitch said there are many facets in keeping tuition down, including controlling costs and being more efficient when spending.

“I would love to see that, just one year, not to increase tuition,” she added.

Keeping the University affordable

As tuition costs go up, however, the University has explored affordability efforts in other areas. This year, the board also agreed to a $19.5 million increase in financial aid — part of a general trend of increasing financial aid faster than the rate of tuition.

“What (the increase) will allow us to do is ensure that students with need, as we have done in the last few years, will not see an increase in the cost of attendance,” Pollack said in a 2013 interview with the Daily.

This tuition increases occur as state-funded opportunities for financial aid have grown scarcer.

Along with decreasing funding for higher education, the state of Michigan has cut initiatives to help low- to middle-income students pay for college such as the Michigan Promise Scholarship program in 2009, a merit-based scholarship for students with exceptional Michigan Educational Assessment Program, or MEAP, standardized test scores.

State Rep. Amanda Price (R–Holland), chair of the state’s Education Committee, said cutting scholarships like the MEAP scholarship was, in some senses, unavoidable.

“I think that’s impacted some folks, I’m sure it has, even low- to middle-income students have been impacted by that cut,” Price said. “But that was driven by the budget realities that the state had been facing and continues to face.”

According to figures from the U.S. Department of Education, listed in the most recent Office of Budget Planning almanac, the average state grant has decreased by $2,608 per student. However, the University has increased the average need-based grant it provides to undergraduate students by $4,774 through its own fund since 2002.

Though the University’s average state grant per need-based student is the second lowest among all public institutions in the Association of American Universities after MSU, it provides the second-highest amount of aid to students from its own resources at an average of $12,233 per student.

The number of need-based grants generally varies based on several factors, chiefly the income distribution among students at an institution.

Wilbanks said when it comes to deciding where to protect University funding while setting the budget and enacting cuts, academics and the student experience are a key focus.

“Here a very, very important decision was made that the academic quality of the institution had to be the number one priority, and in making it a number one priority you make decisions along the way to support your being able to invest in those high priorities — student experience, faculty excellence and the overall academic excellence of the University,” Wilbanks said.

In November 2013, partially in continuation of that push, the University launched the Victors for Michigan campaign — the largest fundraising drive for a public University in history.

The campaign, chaired by Stephen Ross, set its goal to $4 billion, with $1 billion earmarked for financial support for students.

“We believe that by judiciously controlling our costs and tuition increases, while also committing University funds for financial aid, we can join with donors to make it possible for the best students, from any socioeconomic background, to afford to get a Michigan education,” Newman, the University regent, said in a 2013 statement.

Changing student body

However, despite maintaining support for low-income students, the University student body has grown wealthier in recent years.

Since 2003, the number of University out-of-state undergraduates who did not apply for financial aid or are from families making $150,000 or more annually has increased by 12 percent, according to the almanac.

In 2013, for both graduates and undergraduates, in-state students made up about 50.2 percent of the student body — 49.8 percent were either out-of-state or international students. This number of out-of-state students has increased by 7.2 percent since 2005.

In comparison, out-of-state students comprise around 10 percent of Michigan State University’s student body, a school generally considered the University’s closest peer among public universities in the state.

Though the typical student with a family income at $80,000 or below pays less today to attend the University as they did in 2003, also according to the almanac, the number of those students is decreasing.

In contrast, the increase in non-resident students and their subsequent rise in tuition money amounted to an added $88 million to the University’s general fund by 2013.

In an interview with The Michigan Daily last week, E. Royster Harper, vice president for student life, said though low income students are provided for from the school’s financial aid, students in the “middle,” socioeconomically, who don’t qualify for Pell Grants yet find the tuition too high, are still struggling financially.

“It really are the kids in the middle that get squeezed,” she said. “That’s where tuition becomes really critical.”

The University’s affordability efforts in comparison

Though the University has taken strides toward keeping college affordable for its students, it still falls behind in several key metrics, and in some cases, struggles to build a climate attractive to students of low socioeconomic status.

According to Mark Burnham, vice president for governmental affairs at MSU, 54 percent of their students graduate without debt, compared to 46 percent of in-state University students. MSU is closest to the University in size, rank and athletics among public schools in the state.

The average amount of debt faced by students at MSU is $24,000. At the University of Michigan, that number is $25,575 — a $1,575 difference — though it is worth noting that tuition at MSU is about $4,500 lower for in-state freshman, and about $11,100 lower for out-of-state freshmen.

Burnham said similar to the University, MSU has stayed affordable by increasing financial aid opportunities for all students. He said MSU has increased financial aid by 45 percent in the last five years.

“We certainly work very hard to make sure we have maximized financial aid as best we have,” he said.

Rachel Osmer, college adviser to Ypsilanti Community High School through the Michigan College Advising Corps, works primarily with students in Ypsilanti who come from working- and middle-class backgrounds.

She said even though the University has a larger tuition sticker price, because of its endowment and large financial aid resources, many of Osmer’s students have the option of attending the school.

“Schools like U of M and MSU because they’re such large schools and such a large alumni network than newer schools, they have more money to offer from the school themselves than from the federal government,” she said.

However, Osmer said many of her students from low socioeconomic backgrounds tend to apply to Central Michigan University, Eastern Michigan University, Western Michigan University or community colleges.

“For a lot of our students here in Ypsilanti, U of M, even though it’s right down the road, it’s still out of reach for them,” she said. “There is this stigma attached to the idea that U of M is an elitist, expensive school.”

Schools like CMU or EMU, she said, are more in her students’ comfort zones because other students from similar backgrounds populate them.

“The people they see in that school are usually upper-middle-class white men and women,” she said. “They’re not people that look like our students, so it’s not representative of a school they would want to go to.”

Overall, Harper said state support is important, but doesn’t entirely address some of the socioeconomic issues students face.

“(Nothing) makes the current price tag possible if you’re middle-class and out of state, so I think any support we get from the state is really important because it allows us to ask for less, but it won’t change sort of who comes to campus,” Harper said.

Correction appended: Due to a calculation error, an infographic that ran in print alongside this article misidentified the tuition of several schools. The corrected infographic is now online with the piece.