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Tuition could use high-cost strategy

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Also by Kate Maternowski:

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by Kate Maternowski

Wednesday, November 14, 2007

Hailing from a middle-class background and attending the University of Wisconsin with only the help of scholarships and loans, I — along with many fellow students looking out for their wallets — have always considered tuition hikes the bane of my academic career.

Despite UW administrative rhetoric constantly touting low tuition as a primary goal, raises in the sticker price for a UW education have been the reality in biennium budgets for many years. As much as the UW Board of Regents seeks to ensure all academically qualified residents have equal access to UW and that financial barriers are reduced for low-income students to allow them to complete their degrees, legislative cutbacks to UW's funding have made tuition increases necessary.

That reality is unlikely to change, and it might be time for UW to consider a new model of tuition and financial assistance.

In the late 1960s, two researchers, W. Lee Hansen and Burton Weisbrod, published a story in the Journal of Human Resources that examined state higher education systems and found that students from affluent families represented a disproportionately large percentage of student bodies at flagship universities, which receive the most state funding appropriations. This finding, as Mr. Hansen and Mr. Weisbrod pointed out, is inequitable, as the "subsidy" low tuition offers was distributed mostly among the wealthy and inefficient because those students would likely attend the selective public colleges even if tuition were higher.

That continues to be the case, and although there is something to be said for UW maintaining low tuition rates in comparison to Big Ten schools and other comparable institutions, continual UW tuition hikes make attendance increasingly difficult for the state's lower-income applicants. A possible solution to this problem would be a shift to a high-tuition, high-aid model that would raise tuition fees for all students in order to make more financial aid available to lower-income students.

This model would be a strategic way to remedy the problem by taking advantage of student demand. Students will continue to seek a UW education, and if those families most able to pay a higher price for that education do so, excess tuition revenue translated into financial aid would make university attendance more possible for students from less wealthy families.

The idea is definitely not foreign to UW. In a presentation to the Board of Regents two years ago, Freda Harris, the associate vice president for budget and planning at UW, said a one-percent tuition increase — $40 to $60 per year per student — would generate $5.5 million in overall additional tuition revenue. While that shift seems more than possible, UW has not yet opted for any kind of intentional high-tuition model.

That is not to say, though, that a high-tuition, high-aid model does not have its supporters. Former Regent President David Walsh has long been a champion of the change — his support being even more relevant considering his children have and do attend UW.

"There is no reason why I shouldn't pay a huge amount to educate my kids at these great schools," he told me. "I can afford it. I should pay for it. Absolutely. And my neighbor wants his kids to go — I want him to pay for it, too."

Of course this model would depend on a fairly inelastic demand for university admittance, but current trends at both UW and in higher education as a whole indicate that is not likely to be a huge glitch. For example, when considering the adoption of a high-tuition, high-aid model, the University of Virginia examined its enrollment demand following an 11-percent tuition increase in 2003 and saw no impact in application numbers.

Another point critics have argued in regard to the high-tuition, high-aid model is that the more academically prepared students from higher economic brackets will opt for a private education if the sticker prices of state public institutions become comparable to those of private colleges. A legitimate concern, yes, but UW's prowess as a top-notch research institution —one of the many benefits to a UW education — offers just one reason why academically gifted potential applicants would still choose Madison.

Finally, opponents of a purposeful shift to higher tuition for the sake of a higher availability of financial aid say this model is a slippery slope to privatization of state universities. Indeed, the model would likely be unsuccessful if not coupled with continued state funding, but preventing the loss of state money is a realistic tenet of any policy that would raise tuition in order to increase aid.

The University of Virginia, for example, clearly outlined this in its 2005 "Restructured Higher Education Financial and Administrative Operations Act," which establishes a high-tuition model. There is an explicit expectation of continued resources from the state along with an agreement that the "Commonwealth [agrees to] continue funding the College at the level the College would receive if this Charter Agreement had not been put in place."

Even with this type of safeguard and assuming the number of applicants to UW would not be significantly affected, the high-tuition, high-aid model could only be successful if the excess revenue from tuition was explicitly streamlined into financial aid increases.

Done correctly, this model could provide huge relief to lower-income UW students who are currently out-priced by UW tuition. To be sure, some students would face a higher net cost of attendance, but that could simply be the solution to the current system that tries to provide a blanket subsidy — by way of low tuition — to all students, including those who don't need it.

Kate Maternowski (kmaternowski@badgerherald.com) is a senior majoring in English.

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Anonymous (November 14, 2007 @ 7:53am):

This is a well-written and well-researched article on the topic of price positioning. I encourage everyone to look at the topic and see how a top flagship school like UW can benefit from this strategy.

Anonymous (November 20, 2007 @ 5:59pm):

While the use of higher tuition would benefit those in the lower classes, it would also discriminate against those students who are not specifically designated low income but who are on the cusp between low and mid level income and those in the lower middle class. It would also provide a severe disadvantage to those students whose parents are not assisting them with their education. Students who were previously able to skim by on their own with loans and financial aid will be left in the intellectual cold. This could create an institution where only the richest and the poorest have access and all others are ignored.

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