October 18, 2012
Universities Propose Innovative Deals in Attempt to Stabilize Tuition Rates
A recent Insider Higher Education article describes the inventive deals that a handful of public universities are pursuing in an effort to keep tuition rates from rising. By offering tuition freezes in exchange for either (1) increased state funding or (2) individual student efforts to graduate on time, universities hope to meet public demands to stabilize tuition and also ease the financial burden of doing so.
1. Public institutions can afford tuition freezes if states pick up the slack. On several occasions, the University System of Maryland has successfully encouraged state lawmakers to “buy down” potential tuition increases. And just last Friday, the University of Minnesota’s Board of Regents accepted a proposal to freeze undergraduate resident tuition if the state provides an additional $42.6 million over the coming two years. This approach has been successful in some states, but the article mentions a major problem: “many states simply don’t have the money or the political will to invest in education at the moment.” However, even when schools do not expect to receive more state support, these proposals may at least spark conversations about the crucial linkage between falling state appropriations and rising tuition rates.
2. Benefits of better on-time graduation rates may be enough to offset costs of tuition freezes. Getting more students to graduate sooner can improve a university’s ranking, lower its students’ average debt, and make room for more incoming students. For some schools, this is enough incentive to provide tuition freezes in a targeted manner. Last week, leaders of the Indiana University system offered to freeze tuition for students who have earned 60 credits by the end of their sophomore year and are, therefore, on track to graduate within four years. Additionally, UT-Austin will pilot a program next year that would award students who receive Federal Direct Unsubsidized Loans with $1,000 of loan forgiveness for each semester they stay on pace to graduate in four years. UT-Austin’s Director of Student Financial Services said the program could save students up to $12,000 over the course of their education.
As public institutions continue to face dwindling state appropriations and increased pressure to stabilize tuition, we may see more of these innovative proposals.