University shifts focus to non-resident students in lieu of state funding

By Jennifer Calfas, Daily Staff Reporter
Published March 31, 2013

Thousands of University students pack their bags each winter and hop on an AirBus headed toward the airport. Once they arrive, they disperse to 50 states and 127 countries.

Out-of-state students constitute 38 percent of the student population — quadruple Michigan State’s 9-percent non-resident population, more than triple University of California, Berkeley’s 10 percent and exceeding the University of Wisconsin's 25 percent non-resident cap. Paying nearly $39,000 a year in tuition with room and board, these students add $88 million to the University’s general fund annually.

Although the University’s non-resident population has hovered around 35 to 38 percent for the past 10 years, it's on the rise. Due to financial contributions to the University and the declining number of high-school graduates in the state, non-resident students are a growing demographic on campus.

After a decade of state funding cuts for higher education — over half of which have come since Republican Gov. Rick Snyder took office in 2011 — the University’s general fund relies on tuition fees to make up for funding lost from the state.

In 1970, state appropriation served as 64 percent of the general fund and tuition accounted for another 26 percent. Now, due to a decrease in state appropriation — which constitutes $273,056,700, or 16.6 percent of the University’s budget — tuition continues to increase and provides 70.2 percent of the University’s current budget.

As the Board of Regents have approved an average 5.09-percent tuition increase each year over the past decade, the impact on non-resident tuition grows.

At the Mackinac Policy Conference in May 2011, University President Mary Sue Coleman said she hopes to see more non-resident students attend the University.

“We have capacity, and these students come paying the full freight,” Coleman said. “They actually add tremendously to the economy of the state of Michigan.”

In 2011, the entering freshman class was 74 percent of non-resident students from families with $100,000 or more income a year, while only 55 percent of in-state students hail from families from the same socioeconomic status.

Since non-resident tuition is comparable in price to a private university, the University has less socioeconomic diversity than it desires. Martha Pollack, vice provost for academic and budgetary affairs, said fixing this issue is at the forefront of the University’s goals for its next capital campaign.

While the University grants nearly $190 million to students for need-based and merit-based scholarships, they do not meet the full needs of non-resident students. To create more economic diversity and meet every student’s financial needs, the goal of the University’s next capital campaign is to provide full need-based financial aid to non-resident students.

While the capital campaign will not begin until November, the University is already putting programs in place to begin the effort. Pollack said last year the University took half a percentage of non-resident tuition to use as financial aid for non-resident students to meet full need for students from “Zero EFC” — zero expected family contribution — backgrounds.

While Director of Admissions Ted Spencer said in an e-mail that all admissions considerations and decisions are made blind to student need, University Provost Phil Hanlon said a prospective student’s decision to attend the University should not be hindered by a lack of financial aid.

“The students’ decision may not be need-blind,” Hanlon said. “We try really hard to provide financial aid to a student who’s admitted, depending on what their need is. We’re not where we want to be; we have a ways to go still.”

While Pollack said the University doesn't purposefully accept more non-resident students due to their financial contributions, the non-resident population is at a high due to a decreasing number of Michigan's high-school graduates.

The state’s population constitutes 3.3 percent of the nation’s population, a decrease from 4.4 percent in 1970. Due to this decrease, there are fewer 18-year-olds eligible for acceptance to the University and a smaller applicant pool from within the state. While there were 190,000 18-year-olds in the state in 1976, there will be 155,000 18-year-olds within the next year. By 2026, the number will decrease to 120,000.

Pollack said that, according to her calculations, the University admits five percent of all high school graduates from the state.

“We try to admit a class so that the last student we admit from in-state is just as qualified as the last student we admit from out-of-state,” Pollack said. “That’s why as you see a drop-off from in-state population, you’re seeing an increase in out-of-state population.”

Joe Greene, the principal at North Farmington High School in Farmington Hills, Mich., said the students who have equivalent grades to graduates that have been accepted to the University received more deferrals and denials in early-action decisions this year. The school usually matriculates 40 to 60 seniors to the University each year.

Greene said he believes the University continues to enhance its diversity by accepting non-resident students, but should consider “broadening its standards” to accept a wider variety of students. He cited former University President James Angell’s belief that the University should provide “an uncommon education for the common man.”

“This is a tough leadership challenge for the University to figure out,” Greene said, adding there's an intrinsic obligation to seek a student body that's as diverse as possible.

While he said the University must meet full need-based aid standards of its in-state students, Greene acknowledged that providing aid to out-of-state students would create a more diverse student population.

As the next capital campaign emphasizes providing full financial aid to its non-resident students approaches, the University plans to inspire donors to target their donations to scholarships and human capital rather than buildings and renovation.

“We need to fashion this in a way donors can get excited about the difference they can make in people’s lives so a lot of this will be storytelling about what students have done and what the impact of having various scholarships has been,” President Coleman said. “We need to describe for people what the need is. They don’t necessarily understand our unmet need, particularly for out-of-state students. We can’t be need-blind.”