Students criticize ‘U’ failed tuition increase proposal as debate surrounding endowment intensifies

Friday, June 26, 2020 - 6:28pm

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Design by Hibah Chughtai

A proposal to increase tuition by 1.9 percent for the 2020-2021 school year and add an additional $50 COVID-19 student fee failed to pass at the University of Michigan Board of Regents meeting Thursday morning. The decision was widely talked about by students on social media, with many saying they were shocked by the University’s attempt to raise tuition, especially since the majority of students in a representative survey of the student body said they expected a tuition discount.

University spokesman Rick Fitzgerald described the motivation behind the proposed 1.9 percent increase in tuition in an email to The Daily. 

“The administration proposed a 1.9 percent tuition increase on the Ann Arbor campus to balance the budget, provide higher levels of financial aid, and adapt to the COVID-19 pandemic,” Fitzgerald wrote. “The budget also included continuing the Go Blue Guarantee and contained a 5.6 percent increase in undergraduate financial aid. That additional $12.8 million increase in aid would have meant most in-state undergraduates receiving need-based grant aid would have seen no increase in tuition costs in the coming year.”

University tuition and fees have increased 42.05 percent for the last 10 years, including the same 1.9 percent last year for in-state undergraduates and 3.7 percent for out-of-state undergraduates. University President Mark Schlissel has noted this trend in rising tuition is to maintain the University’s commitment to academic excellence, especially as inadequate state funding for higher education continues to decrease. This year, as Michigan struggles with coronavirus, state appropriations are likely to be further reduced as the state faces a $3.2 billion budget deficit. 

“The university has long been committed to affordability,” Fitzgerald wrote. “Significant university resources are directed toward financial aid. Last fiscal year, we provided $344 million in grant and scholarship support for students. Only 1 percent of that support was directly funded by the state, 10 percent by federal sources, and 6 percent by private sources. The remaining 83 percent was from university resources, including general fund, endowment support and athletics.”

Though students have lamented tuition increases in the past, this year’s strong opposition centers around students hesitant to pay increased tuition without receiving the full benefits of in-person instruction. Though the University’s recently released decision describes their plan as an “in-residence, public-health informed” fall semester, all classes of over 50 people will be held online, and each department and school will make the final determination.

Last month, some students filed a lawsuit seeking compensation for the move to online classes in March. The University said they do not owe students money for switching formats due to academic freedom principles that give the University alone the power to decide mode of instruction.

Additionally, LSA sophomore Becca Stachel told The Daily that tuition is already a huge obstacle for many students attending the University. Stachel finds it difficult to justify paying the same tuition for online classes in the fall, especially for students impacted most by COVID-19.

“A lot of people aren't financially stable (after the pandemic) and tuition is a huge burden on a lot of students,” Stachel said. “So, to have a lesser quality of education, but still have to pay the same amount of money when you likely also took pay cuts because of the pandemic, seems unfair to me.”

In early June, Central Student Government members Public Policy senior Damian Chessare, Rackham student Hayden Jackson and Architecture student Lauren Conroy put together a survey gauging student sentiment on tuition and enrollment in light of the COVID-19 pandemic. Their report found the majority of students surveyed expected a tuition discount of just under 20 percent to be acceptable if classes were in a hybrid format. 

59.4 percent of the students surveyed said a discount decision would affect their enrollment decisions at least a moderate amount. Over 40 percent projected that their future financial circumstances were either “very insecure” or “somewhat insecure.” 

LSA junior Annie Mintun, a LSA representative to CSG, created a petition calling for the University to decrease tuition after Thursday’s Regents meeting. As of Friday afternoon, the petition has over 2700 signatures. 

Mintun said she created the petition after waking up to shocked texts about the proposal to increase tuition from many of her social circles Thursday morning. Mintun said her petition has collected responses from many students whose financial situations have completely changed since the COVID-19 pandemic.

At Thursday’s Regents meeting, Regent Mark Bernstein (D), who voted in favor of the tuition increase proposal, said the increase in tuition was necessary to provide financial support for students. Because of this increase in financial aid, Schlissel claimed most students receiving need-based aid would see no increase in their tuition costs for the upcoming academic year.

“The people that we’re calling upon to pay an extra $400 or so or $300 actually aren’t the ones who are being affected by this awful economy,” Schlissel said.

However, Engineering senior Alexis Doreste was skeptical of Schlissel and Bernstein’s claims. Doreste said he believes an increase would actually place a heavier burden on students already struggling to pay the increasing tuition prices. 

“This is the same mantra we hear every year that it’s going to be a marginal increase in tuition prices with a likewise increase in people’s financial aid and that most students are not going to feel the burden,” Doreste said. “But we know this isn’t true. The burden is left on us because the only financial aid that tends to increase is loans … And a lot of kids don’t want to grow up with that much debt to their name, especially people who can’t afford to pay it from the get-go.”

Similarly, Stachel noted a 1.9 percent increase may be overwhelming for some students.

“The difference of even a 1.9 percent increase in tuition is a huge deal to a lot of people,” Stachel said. “Something that seems hairline to a university could be a difference between somebody being able to attend this university and not being able to attend.”

LSA senior Amytess Girgis also said this reasoning misses that students who are out of the range of non-loan-based financial aid may have added financial burdens this upcoming year. 

However, not all students disagree with the University’s proposal. While the proposed increase has been met with pushback from many students, SMTD junior Helen LaGrand told The Daily she understands the justification for the proposal. 

“It is an annual adjustment that addresses inflation,” LaGrand wrote. “The University has lost a lot of revenue, so cutting revenue further by not adjusting to inflation seems foolish. Though the school has an obligation to its current students, it also has an obligation to future students. People are advocating dipping into the endowment, but those are productive assets that keep the university growing. That being said, I’ve heard talk of increased financial aid to students who have been financially affected by COVID-19, so I hope the school can help its current student body in that way.”

Recent University alum and incoming Rackham student Abby Chapin agreed with LaGrand that the proposed increase is similar to tuition increases in other years. However, she said she opposed the tuition hike because this year’s situation is not similar to a normal year.

“If this was a normal year, a 1.9 percent would be normal, even though I think tuition is extremely high,” Chapin said. “But given the circumstances of this year and the financial burden students are already facing because of COVID … I think giving students a break if the University is able to absorb the cost is the right choice.” 

Chapin said she is trying to understand both sides and knows the University might have higher expenses than normal, especially if online education actually costs more to implement. According to Chapin, if tuition were $300 to $400 higher, her family would be able to absorb the cost. Chapin said she would be willing to do so to help other students.

However, Mintun said she believes it shouldn’t be necessary to raise revenue from students by raising tuition when the University has other funds like its $12.4 billion endowment, the third largest among public universities after two public school systems. 

Mintun said more of the University’s endowment should be used to alleviate the burden on students, rather than have students bear the financial burden to preserve the endowment. 

“The fact that the University isn’t willing to use the endowment is absurd because we are in the midst of an extremely unprecedented time,” Mintun said. “I feel like this is the time that the endowment should be used, and this is what the endowment exists for: to protect students.”

In response to student calls to use more of the endowment, Fitzgerald told The Daily in an email the University already uses a significant portion of its endowment funds towards affordability. He used several statistics, such as the claim that without endowment support, tuition would be about $6,000 higher each year.

“About 22 percent of the total endowment is restricted to direct student financial aid,” Fitzgerald wrote. “Other endowed funds have an indirect effect on tuition as well. The income from the remainder of endowed funds is used to pay for faculty, academic support, research, patient care and building maintenance, so that tuition increases are not required to cover the full cost of faculty salary increases, for example.”

Yet, Girgis agreed with Mintun, criticizing the University for raising tuition despite “not spending a single penny” of unrestricted funds in covering losses related to the COVID-19 pandemic.

In April, Schlissel announced the University is projected to lose $400 million to $1 billion due to the COVID-19 pandemic. In response, administration implemented hiring freezes, furloughs and executive pay cuts while also limiting non-essential spending. However, they have not considered excess funds from the endowment as an option to cover losses.

Higher education administrators nationwide have argued that dipping into endowment funds would hurt universities’ long-term fiscal stability. They have also pointed out that many funds within the endowment are restricted by donors for use towards certain investments or activities.

In the past, Schlissel has defended the University’s management of the endowment in response to student calls to divest funds or invest funds differently.

“The board is responsible for this almost $12 billion endowment, and it’s a very serious fiduciary responsibility, and we have to live up to our commitment to the donors that gave us the funds that became the endowment to consider the potential yield, and then how much risk we’re willing to accept as the main factors in deciding about investments,” Schlissel said. “So, the board has to really look carefully at its responsibilities.” 

However, some, like Eastern Michigan University accounting professor Howard Bunsis, have noted the University has $6.7 billion of unrestricted funds. Bunsis and others, including at the University, have argued universities can afford to use their endowment to ameliorate unprecedented burdens caused by COVID-19.

A number of universities have announced that tuition will not increase in the year ahead following the economic crisis due to COVID-19, including other institutions in the state such as Michigan State University, Wayne State University, Central Michigan University, Western Michigan University and Oakland University. Before the tuition increase proposal, close to 500 people had already signed a petition calling for a tuition freeze at the University and its subsidiaries.

Doreste cited the decisions of these other schools compared to the University’s failed proposal. He said administrators’ justifications for raising tuition feels like threats when the University is the richest university in the state.

“When we know that other schools around the area have already frozen tuition, when you hear some in administration openly say ‘If we don’t increase tuition, bad things are going to happen and it’s your fault,’ and they have a $6.7 billion unrestricted portion of the endowment, I don’t really have any willingness to believe them,” Doreste said. 

Girgis is a student activist who has worked on multiple initiatives pushing administration to invest in less privileged communities within the University. She said she and others have been “fighting tooth-and-nail” as administrators have repeatedly responded to these initiatives by pointing to the importance of maintaining the endowment.

Specifically, Girgis has been active in the One University campaign, a coalition calling the University to give its subsidiary campuses U-M Flint and U-M Dearborn — which have a higher proportion of low-income students as well as students from minority backgrounds — more funding. She noted U-M Flint cut 41 percent of its lecturers this month because of a “very difficult financial situation.”

She said she understands, to an extent, the argument that the University needs to maintain its endowment. However, if the endowment has large excess reserves, Girgis said she questioned why the University insisted on raising money from its students rather than spend even a small portion of this excess, especially given the current economic crisis impacting many students.

“Being a top public university is a double-edged sword,” Girgis said. “You have the resources to actually support your community, and also you become paralyzed because you have accumulated the wealth and power and prestige of a D1 institution that you’re too scared to take bold action when you need to.”

Doreste also said pay cuts by executive officers such as Schlissel cannot solve the systemic issue that lies in the way higher education and economic policy work. 

“If you justify higher ed under its own pretenses, it’s always going to make sense,” Doreste said. “I was incorrect when I said broken, because this academic and economic policy isn’t broken at all. It’s working exactly as people like Schlissel want it to work. It’s maximizing profit for its endowment and minimizing liabilities. And then it’s turning the liabilities towards the students. No amount of justification for that system erases the fact that the priorities are out of order.”  

Stachel acknowledged the University is in a difficult financial situation. However, she said it is crucial that the Regents consider the financial impact of COVID-19 on individual families, who unlike the University, do not have a large sum of money behind them. 

“I think the school should be taking into account what the pandemic has done to individual families in addition to what it's done to universities,” Stachel said. “Obviously universities have lost a lot of money, but at the same time, everyone has lost a lot of money. And to assume that jacking up tuition is something that people can handle doesn’t seem right.”

Daily News Editor Claire Hao can be reached at cmhao@umich.edu. Daily Staff Reporter Megan Shohfi can be reached at mshohfi@umich.edu.