Predictable as the falling of autumn’s last leaves, December brings news that the state’s budget has a big deficit, that the UNC system claims that it needs a lot more money, and talks of tuition increases.
Brad Wilson, chairman of UNC’s Board of Governors has said that he is against any tuition increases for residents this year. I don’t agree with his characterization of tuition increases as a “financial arms race” – having students pay more so taxpayers don’t have to shoulder so much of the cost is not akin to an arms race – but let’s put that aside. What about tuition for nonresidents?
North Carolina law states that tuition charged to out-of-state students is to be “comparable to the rates charged nonresident students by comparable public institutions nationwide…” That’s pretty vague language, leaving plenty of leeway for the Board to charge what it thinks is optimal. Currently, nonresidents pay about $17,500 at Chapel Hill, compared to $4400 for residents.
What are the nonresident tuition rates at some “comparable” public universities? Nonresidents who want to attend the University of Virginia have to pay substantially more – almost $23,000. Tuition for nonresidents is higher still at the University of Texas – more than $27,000. Another pricey state “flagship” school is the University of Colorado, at nearly $21,500.
But not all state universities are more costly than UNC. Nonresidents of Michigan pay about $14,000 to attend the University of Michigan, only twice what residents are charged. Out-of-staters wanting to go to the University of California face tuition of $17,000. The University of Georgia is considerably less costly at $11,800.
So UNC’s nonresident tuition is neither especially high nor especially low, but that doesn’t mean that it is optimal. UNC might be overpricing or underpricing its educational wares. Neither is desirable from the taxpayers’ standpoint.
A key question is whether UNC has to turn away prospective customers at its current rates. If a business has a product or service for sale and finds that there is more demand for it at the price it has set than it can satisfy, that’s a clear signal that the price is too low. Suppose that a restaurant charged only $10 for a great steak dinner and had to keep turning away customers because it didn’t have enough room. The owner would quickly realize that he should raise his price.
That is the situation that some UNC campuses face. For the 2003-4 academic year, Chapel Hill had more than 10,300 nonresident applications. Due to the out-of-state enrollment cap, it could accept only 1,986, of whom 619 enrolled. At NC State, there were 3,260 nonresident applications; 1,814 were accepted and 432 enrolled. At the other UNC campuses, there was far less of a spread between applications and acceptances.
What this suggests is that the sizzle of the steaks at Chapel Hill and to a lesser degree NC State is attracting a big crowd of would-be diners, many of whom can’t be served. A price increase at each would seem sensible.
We could also compare the cost of attending UNC with the cost of attending other schools within the state. Educationally (and culturally and athletically, too), Chapel Hill and State think of themselves as peers of North Carolina’s top private schools – Duke, Wake Forest, and Davidson. How much does it cost to attend those schools?
Tuition and fees at Duke will take a $30,000 bite out of your bank account. Wake Forest and Davidson are just slightly less. True, not everyone has to pay full sticker price due to reductions called “financial aid,” but it’s still true that for a non-resident, UNC is a bargain compared to the state’s top private institutions.
North Carolina is near the top in the percentage of expenditures on public higher education that come from government appropriations. Based on statistics in The Chronicle of Higher Education, more than 48 percent of the money spent on our public colleges and universities comes from taxpayer dollars, sixth highest in the nation. By contrast, Virginia funds its state higher education system relying on taxpayers for only 30 percent of the money. Michigan manages with only 26 percent.
That suggests that North Carolina could, and I believe should, do much more to apportion the expense of the state’s higher education system to willing payers and donors, thereby taking some of the pressure off our badly squeezed taxpayers. Increasing tuition rates for nonresidents is one way to do so.
George C. Leef (georgeleef@popecenter.org) is Executive Director of the John William Pope Center for Higher Education Policy