The University of North Carolina is proposing to charge lower tuition to out-of-state students who live close to the state border. The UNC Board of Governors will consider the proposal, which is called “border tuition,” at its January meeting.
While it sounds good on the surface, the policy will be costly, with few benefits.
At the January meeting, the board’s budget and finance committee will review discounts for two schools—UNC Pembroke and Elizabeth City State University. UNC Pembroke is located near the border of South Carolina and Elizabeth City State near Tidewater Virginia. At a June meeting, the suggested charge for border students was in-state tuition plus ten percent.
The idea is to help those campuses fill empty buildings and take advantage of economies of scale. The discounts are particularly attractive to ECSU because its enrollment dropped more than 20 percent from 2010 to 2013. The school is projected to lose 585 more students by 2016, bringing total enrollment to less than 1500 students. The school has already cut positions and degree programs to tighten its belt.
The problem is that most of the costs of the policy will fall on North Carolina taxpayers. The policy would worsen the present condition, in which North Carolina taxpayers already indirectly foot some of the bill for out-of-state students at ECSU and UNC Pembroke.
As the chart indicates, out-of-state tuition only covers the cost of instruction, i.e. professors’ salaries and benefits. It does not even cover the total “education and related” (E&R) spending—all expenditures directly related to student instruction and support. Out-of-state tuition is also far less than the total revenue that an institution receives by admitting a North Carolina student—tuition plus state appropriations.
At ECSU, the E&R expenditures per student were $19,402 in 2012-13. In the same year, out-of-state tuition and fees totaled $14,868, or $4,532 less. Taxpayers and North Carolina students pay the difference. The proposal before the Board of Governors would increase that burden by reducing the out-of-state tuition and fees.
At Pembroke, the difference is less striking. E&R expenditures were $14,784 per student, while out-of-state tuition and fees were $14,064, a difference of $720. The cost and tuition are close for out-of-state students. Why change this balance?
By and large, education subsidies for students should be reserved for North Carolinians. The North Carolina constitution reads, “the benefits of The University of North Carolina and other public institutions of higher education, as far as practicable, [should] be extended to the people of the State free of expense.” Charging South Carolina or Virginia students a mere ten percent surcharge on in-state tuition is unfair to North Carolina taxpayers who pay a “surcharge” of more than 200 percent of the schools’ tuition! The General Assembly appropriated $14,668 for each in-state ECSU student and $9,502 for each UNC Pembroke student in 2012-13.
Another underlying reason for taxpayers to subsidize students is to enable them to become productive citizens in the state. But it’s unlikely that students from nearby Tidewater Virginia or South Carolina will remain in North Carolina after graduation. They can easily cross the border and go back to their hometowns.
Right now, most graduates of UNC system schools live and work in North Carolina—even ten years after graduation. But that’s because they’re from North Carolina in the first place. Across the system, just 11.5 percent of undergraduate students come from out of state. (At ECSU, that number is 11.1 percent. At UNCP, it’s just 3.6 percent.)
If the Board approves the policy, it might not even work to bring in more students. According to a 2012 paper by the National Bureau of Economic Research, most tuition discounts intended to affect migration end up going to students who would have chosen that institution anyway. In order to change students’ minds, the discount would have to be very high, indeed. Is it really wise policy for schools to accept students at rates so low?
One can’t help but feel that this policy, is another effort to prop up schools—in this case, Elizabeth City State—that are experiencing severe declines in enrollment. It may well echo the minimum admissions pilot (MAP), which will allow three schools to accept students whose SAT scores are below the system’s minimum if their high school grade average is a bit higher than the minimum. (North Carolina Central University, Elizabeth City State University, and Fayetteville State University are part of this pilot program.)
Like the MAP, the policy is designed to restore enrollment to ECSU. The school made national news this year when the North Carolina legislature floated the idea of closing the school. In addition to having falling enrollment, ECSU has low graduation rates, high debt default rates, and its students have trouble finding jobs. These issues cannot be solved by simply attracting more students.
In short, North Carolina taxpayers would bear the costs of border tuition without reaping any benefits. Yes, it is possible that the schools may benefit by increased enrollment, but not enough to justify the costs. If UNCP and ECSU truly have unused assets, the Board should consider other solutions to take advantage of them.