How to Read Into Talk of a Tuition and Fee Increase

Yesterday, after writing my post about the University of Minnesota-Twin Cities, a reader sent me a link to an article about a proposed non-resident tuition and fee increase, which I also shared on this site. I recommend that any family considering one or more of the Big Ten schools read this article to see the variations in non-resident tuition and fees between the public schools, from the University of Michigan at more than $45,000 to the University of Minnesota-Twin Cities at just over $22,000.

In reading this article, this quote from a regent of the University of Minnesota system about the current charges for non-resident tuition and fees and well as a proposed tuition and fee increase caught my attention:

“I think being at the bottom, in terms of sticker price, hurts us. We’ve got to be concerned with our brand. Otherwise, we’re talking about Lexus and Toyota. And we’re Toyota.”

I’m glad that this regent is proud of the university that he has been appointed to serve, and that he believes that the quality of education is equal, in some ways superior, to that of the universities that charge non-residents more. But there are other ways to consider a comment about a tuition and fee increase

One way to look at this particular comment: “If we are supposedly ‘as good’ as the University of Michigan, and we attract non-residents about as well as they do–around 40 percent of Michigan’s student body are non-residents–then our charges should be closer to those of the University of Michigan.”

The problem with that type of argument is that the University of Michigan has a longer history of accepting non-residents and stronger brand recognition among prospective students as well as college advisors and school counselors. That, at least to me, means that University of Michigan is more likely to attract students who can pay the full costs of their education than the University of Minnesota. Their non-resident students are also more likely to be in a better position to take the financial pain from a tuition and fee increase. The University of Michigan, if you look at various ranking books, attracts better-performing high school students, if you buy into ACT or SAT scores than the University of Minnesota. The freshman retention rates and graduation rates for the University of Michigan are higher as well. The resources for career services are greater, too.

The University of Michigan has a much larger ($9.7 billion vs. $3.1 billion) endowment than the University of Minnesota, according to the National Association of College and University Business Officers. The University of Michigan is in a better position to aid non-residents who cannot afford to pay the full costs of their education than the University of Minnesota. Michigan met, on average, 82 percent of the financial need for the students who were determined to have need in 2013-14, according to its 2014-15 Common Data Set. Minnesota met, on average, 72 percent of need in the same school year. The University of Michigan is better equipped to ease the financial pain of a tuition increase on the needier students and their families.

When a public university considers a tuition and fee increase, it should not be to “keep up” with peer or aspirant schools. The purpose should be to fulfill the needs of its students as well as the non-student communities that depend on the university’s resources.

The University of Minnesota, in addition to being a degree-granting university, offers continuing educational services to business people, farmers, teachers and government as well as courses that people take for enrichment or intellectual curiosity. If the faculty has not received a raise in bad economic conditions, the increase should allow them to receive one in better times. If full-time teaching positions have gone unfilled in bad times, the university should be put in a better position to fill the most needed ones. If non-income producing facilities–most classroom buildings are–need repairs, the increase should be in place to help the university make them. If more students need financial aid to reduce their dependance on student loans and/or graduate on time, the university should be in a better position to allocate dollars for financial aid.

A tuition and fee increase is not about building the prestige of a system versus another. I can name schools that charge less or award more scholarship dollars and perform no worse than comparable, and more expensive, schools of the same size and reputation. The extra money that a family would spend to help a school maintain its supposed prestige could be put to better uses if that family will struggle to pay for college. Not to mention that the University of Minnesota is not likely to be perceived to be “as good” as the University of Michigan for the remainder of that prospective student’s life, no matter how much the University of Minnesota would try to sway people otherwise.

To be fair, Minnesota’s president proposes that non-resident tuition and fees rise at a rate of 5.5 percent per year, which would likely leave his school in the bottom two within the Big Ten (with the University of Nebraska-Lincoln) in terms of non-resident tuition and fees. He is not proposing that his university double those charges to match Michigan’s. That would be foolish. He does not have the financial aid budget nor the brand image that Michigan has for undergraduates.

Given that the University of Minnesota’s largest markets for non-residents come from neighboring states as well as a neighboring Canadian province, and that the universities in those places have fairly reasonable charges, the president is not likely to want to risk losing students from those markets. The neighboring states and Manitoba are the home location for nearly half of the non-resident students in a freshman class.  Raise tuition and fees too much to scare prospects within this market away, and you have to find more prospects from your home state or elsewhere. Those from the home state pay less; there may also be other public obligations, such as state scholarships, to help to further subsidize the costs of their education. Those from elsewhere are a harder, and more expensive, sell.

Imagine a student from New Jersey, the state that so many college-bound high school students want to leave, who wants the Big Ten experience outside of New Jersey. S/he can realistically get into the University of Michigan, but the parents would have to struggle to pay. Suppose Minnesota also wants this student. It has everything that s/he wants that s/he is hoping to receive from Michigan. Does anyone not believe that the University of Minnesota would offer scholarship dollars to get this student, if it charged the same, or very close, to Michigan’s tuition and fees?

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