Miami to drastically increase in-state tuition

[Docta]

Chronicle of Higher Education
Friday, April 4, 2003

Miami U. of Ohio Likely to Raise Residential Tuition to Match
Nonresidential Rate

By SARA HEBEL

Miami University of Ohio wants to break a longstanding
tradition that continues in most states: different tuition
rates for residents and out-of-state students.

This month, the university's Board of Trustees will consider a
plan that would charge Ohio residents the higher tuition that
out-of-state students now pay. If the plan is approved, which
Miami's administrators and trustees expect, the university
would become the first public institution in the country to
charge one rate, according to many higher-education officials.

This year, Miami's in-state students, who make up 72 percent
of the student body, pay $7,600. The university's out-of-state
tuition is $16,300. If the new policy is adopted, higher rates
would kick in for Ohio residents entering the university in
the fall of 2004. It would not apply to current students.

Under the plan, Ohio residents would still pay less than their
peers from other states, however. That's because they would
automatically receive a scholarship award equal to at least
the amount that state lawmakers annually provide the
university for each student, an amount that now totals about
$4,400 per year. Some in-state students also would receive
more aid from a new Ohio Leader Scholarship, which would be
awarded to students with financial need or special abilities
and those who intend to major in subjects, such as
engineering, that the university deems key to the state's
economic development.

James C. Garland, the university's president, said the new
tuition structure would help the university become more
self-reliant as state support for higher education dwindles.
The single-rate tuition system, he said, would give the
university more money and flexibility to compete with private
universities for top Ohio students and entice them to stay in
the state by offering aid packages that are more competitive
with the generous grants and scholarships that other colleges
provide. More aid also could be directed to middle-class
families who earn too much money to benefit from Pell Grants
and other federal-aid programs but who still struggle to pay
college bills.

The plan, Mr. Garland added, also might make it harder for
state lawmakers to cut the university's budget since the
scholarship aid for Ohio residents is tied to the per-student
budget allocation the state provides the institution. "It
would send the message to legislators," he said, "that
students really are harmed when budgets are cut."

Some higher-education analysts bashed Miami's tuition
proposal. Joni E. Finney, vice president of the National
Center for Public Policy and Higher Education, argued that the
idea amounts to nothing more than a rationale to increase
in-state tuition and an effort to move the university up in
the annual college rankings in U.S. News & World Report.

When institutions put more money into scholarships by raising
tuition, as Miami proposes in the plan, much of the aid
typically ends up being awarded on merit, she argued. And
that, she said, does little to put college within closer reach
of many low-income students.

"Ohio already ranks poorly on affordability, and this is going
to be serving students who are going to go to higher education
anyway," Ms. Finney said. "This may serve the needs of Miami
University, but for Ohio residents it's disastrous."

Others, however, praised Miami's plan as an innovative
response to economic realities. David Ward, president of the
American Council on Education, said Miami's plan offers a way
for the university to preserve its quality by ensuring
revenues as state support remains limited. At the same time,
he said, the idea also promotes access by providing more aid
for families that need it by asking those who can afford to
pay full tuition to do so.

"This is a very courageous response to extremely difficult
economic circumstances," Mr. Ward said. "The magnitude of it
and the openness of it is impressive."

He said that Miami's plan probably would not serve as the best
solution for less-selective public colleges since it is
important for states to provide some low-tuition college
options for residents. But he added that he hoped Miami's new
strategy would spur policy debates about long-term tuition
approaches as public colleges face declining state support.

Mike Chapman, a junior at Miami who was recently elected
president of the Associated Student Government, said he
worries that some students could struggle to afford the higher
tuition under the proposal. But over all, he said, the new
approach seems to offer more positives than negatives.

"People are realizing that the goals the university has are
achievable," he said. "But to do that we need monetary
resources."

[c-lando]

Dude...don't you mean that Miami has proposed TO RAISE in-state tuition rates?

[Docta]

ah, i suppose that title is a bit confusing, i meant that they were dropping the in state tuition rate discount, lemme fix

[Docta]

and in other news, university of cincinnati just announced its cincinnati pride grants. now any graduate of cincy public school system who is eligible for a pell grant will be given full tuition and books free of charge. very nice. different than the private school model miami is adopting here.

[Sovrana]

hmmm...I wonder if that means I'll get a raise! ;)

[RichmondVA]

That's actually a brilliant move for the school, although probably not so good for the state as a whole.

They could probably give a larger "scholarship" to preven the tuition from going up so much, but the idea of raising tuition and giving scholarships is smart. I was wondering when a public school will do this.

A $10,000 tuition with a $5,000 scholarship is effectively the same as a $5,000 tution. Only you can now manipulate your figures much easier. Ever wonder why private schools fare so much better on US News and World Report? It's because some of their measures are closely tied in with tuition, not actual revenue (most schools are non-profit). Now all of a sudden the school is "spending" an extra $5,000 per student.

And it gives them much more leeway for tuition hikes. If the state is going to cap increases at 7% or whatever, 7% of 10,000 is a lot more than 7% of 5,000. Now they can say, "We could have raised tutition as high as 7% but we only raised it 3%, see what a good job we're doing?"

[DudeMan]

The main benefit of this is that Miami will be able to do what private schools already do -- maximize total revenue by essentially charging based upon ability to pay. Those who come from wealthy backgrounds have to pay the entire tuition. Those with more modest means get 'scholarships' that reduce the list price.

From an economic standpoint this is smart because it essentially allows them to take the whole consumer surplus for themselves. From a fairness standpoint I think this is ridiculous since they'll be screwing the very people who pay higher taxes in the first place. But, otoh, I don't favor university-level subsidies for anyone, and this is probably the first in a long series of incremental steps of reducing overall secondary education subsidies; so, although I don't like the 'from each according to his ability to each according to his need' mentality, I see where this is coming from.

[Docta]

Originally posted by DudeMan
The main benefit of this is that Miami will be able to do what private schools already do -- maximize total revenue by essentially charging based upon ability to pay. Those who come from wealthy backgrounds have to pay the entire tuition. Those with more modest means get 'scholarships' that reduce the list price.


of course the problem with this is the penchant/inclination for the institution to enroll a "fully paying" student over a "discounted student." this will be especially worrisome in times of financial difficulty for the school. will they accept the obviously stellar student with finacial need, probably, but for the most part you will see a drift in enrollments of wealthy kids.

the other problem is the perceived barrier for entry for the lower income student. this is particularly the case for first generation students who have no idea of the scholarship/grant/discount opportunities available to them at the more expensive colleges.

[RichmondVA]

Docta,

Do you really feel there is that much difference between public and private institutions? Private institutions are non-profit, and most of them do consider access issues. OTOH, public institutions still compete for students and try to raise their reputation. You look at both the real-world constraints (pleasing alums, tuition revenues, grants, etc.) and institutional missions and public and private schools are pretty similar.

Granted, the larger public schools (OSU, etc.) don't really have private equivalents. But the difference between say, UVA and Berkeley vs. Emory or even Princeton is probably not so great.

[dcXhc]

Originally posted by RichmondVA
But the difference between say, UVA and Berkeley vs. Emory or even Princeton is probably not so great.

Spoken like a true Wahoo.

[DudeMan]

Originally posted by Docta
of course the problem with this is the penchant/inclination for the institution to enroll a "fully paying" student over a "discounted student." this will be especially worrisome in times of financial difficulty for the school. will they accept the obviously stellar student with finacial need, probably, but for the most part you will see a drift in enrollments of wealthy kids.

the other problem is the perceived barrier for entry for the lower income student. this is particularly the case for first generation students who have no idea of the scholarship/grant/discount opportunities available to them at the more expensive colleges.
Yeah, one would hope they would have a chinese wall between admissions and financial aid. The other potential effect we could see would be that more affluent students end up go to private colleges in higher numbers. If there is no cost advantage of going to Miami verus going to an Oberlin, more people might end up going to an Oberlin.

And, I think you raise a valid point about 1st generation educated types not having the same know-how of what financial aid is, how to get it, etc. A really really good book on the subject is A Hope In The Unseen, which was written by a WSJ reporter who documented an inner-city kid's journey from a falling-down DC high school to the Ivy League.

Go figure, we find something we agree on.

[RichmondVA]

Originally posted by dcXhc
Spoken like a true Wahoo.

Nah-- you're thinking about my sister, CharlottesvilleVA.

I actually went to one of the supposed "rival" schools.

[Docta]

Originally posted by RichmondVA
Docta,

Do you really feel there is that much difference between public and private institutions? Private institutions are non-profit, and most of them do consider access issues. OTOH, public institutions still compete for students and try to raise their reputation. You look at both the real-world constraints (pleasing alums, tuition revenues, grants, etc.) and institutional missions and public and private schools are pretty similar.

Granted, the larger public schools (OSU, etc.) don't really have private equivalents. But the difference between say, UVA and Berkeley vs. Emory or even Princeton is probably not so great.

they both compete for the top students yes, and in that instance i think the privates would actively recruite even the lower income students. but the vast majority of "average" college students do not fall into that category. and when push comes to shove the private school (and now miami) will give the slot to the full paying student every time. private schools do not market the fact the vast majority of their students are given a discount on tuition (i had no idea about this untill i got into a phd program in higher education for god sake), and i think this is purposeful, knowing they want the pool filled more with those who can pay for the full ride on their own.

another interesting note on reading more about this from an email sovrana (a miami prof) got this morning. the ohio student scholarships talked about above are renuable based on students' gpa in college. so that is saying, if you can pay your own way your free to finish your degree riding a D grade as always, if you need aid then the bar is now raised. i have no beef with this for a private institution, but this should NOT be the case for a public university.

and cheers to you dudeman, for admitting to sharing an opinion with me. let's try and dig to find more stuff. 8-)

[Orestes]

Originally posted by Docta


the ohio student scholarships talked about above are renuable based on students' gpa in college. so that is saying, if you can pay your own way your free to finish your degree riding a D grade as always, if you need aid then the bar is now raised. i have no beef with this for a private institution, but this should NOT be the case for a public university.

this is the case for virtually ALL TYPES of aid, both institutional and federal thanks to something called satisfactory academic progress. there are three tenants to SAP: completion rate, GPA and maximum time frame. i dont have time to go into detail about them, but if you're really that interested, pm me.

the department of education has put SAP into place, so schools have virtually no say in that.

in ohio, the only aid programs i am aware of that are not restricted by SAP are in fact ohio state programs, like the ohio instructional grant and ohio student choice.

this is what i do for a living.

[Docta]

Originally posted by Orestes


this is the case for virtually ALL TYPES of aid, both institutional and federal thanks to something called satisfactory academic progress. there are three tenants to SAP: completion rate, GPA and maximum time frame. i dont have time to go into detail about them, but if you're really that interested, pm me.


ok, but what miami is doing here places even more students in the situation of receiving aid in this private model to live up to this SAP model.

boy, i would not want to be the financial aid officers at miami next year!

[Orestes]

i'm not disagreeing with you at all docta. i think what miami is doing is shitty, especially when you consider the high amounts of alternative loans students are already incurring. there is an aggregate loan limit that exists for stafford loans which does not exist for alternative loans. one of the main worries in the financial aid profession right now is the thousands and thousands of dollars of debt students have when they are graduating. it's really scary to think of a student graduating after four years and having $30,000 of debt.

my office has a pretty close relationship with the office at miami, so i'll be emailing some of them on monday to find out what they think about this.

i look at it as a way for miami to become more of an elite school. as my high school english teacher would say, miami is trying to become the harvard of the midwest.

there was something else i was going to say, but i forgot what it was. :p

[mattsledge]

With funding from the state becoming less and less each year, Miami HAD to do something to raise attention, and this was it.

While I don't agree with some of it, it's a necessary step they have to take.

As an aside, the way Ohio funds colleges and school districts is an absolute joke.

[RichmondVA]

The reason private institutions charge more tuition and then turn around and give more aid is because it lets them juggle their books better. A lot of the major costs to institutions are fixed or semi-fixed (buildings, physical plant, equipment, books, etc.) Once you've gone ahead and hired a professor ifor $65,000, it doesn't matter THAT much whether s/he teaches 15 students in a class or 20. So what they can do is offer you $5000 worth of service in the form of tuition breaks, but the actual cost to the university might only be $3500.

Plus, then they can leverage the tuition in many ways. Virginia has a program that funds students going to private institutions. Every year the privates compare their tuition to public tuition and say, "See there's a gap of $15,000 in tutition. We need more funding for the program." What they don't say is that the ACTUAL gap is much less. But if your a student and you go to the admissions office they WILL tell you the opposite: "Yes our tuition is $15,000 more but in the end you'll only pay $10,000 more." The student feels like they "earned" a scholarship and the institution comes out way ahead in terms of state funding and in the US News rankings.

The schools select their students based on academics first. If they drop a student because they can't pay then they have to take a lesser-qualified student. In general, they'd rather have the better student than the tuition revenue. It helps the schools reputation and the better students will tend to graduate and donate more as alumni. I'm not saying that privates don't play around at the edges but publics do as well. If you give a lot of money to William and Mary or UVA, your child will have a MUCH better chance of getting in.

[RichmondVA]

One more thing: I don't want to make it seem like I'm coming down on public universities or public university funding. Both my sister and I went to public institutions. And we both work in the higher ed field-- my sister actually works at an institution.

I guess what I'm saying is that what is more important than more funding is that people start from the top and think about WHY higher education is important. Then retool the whole funding model accordingly. Because under the present model you can give institutions as much or as little funding as you want but you will primarily affect quality, not access.

If you were to look at the priorities of Institutional Boards and state legislators, they want quality schools, not more graduates. This attracts smart students from out-of-state who will then hopefully stay and help the economy. It also attracts companies who take advantage of the students and the research. They also use the cultural base that institutions provide as well as the opportunity for education to help attract employees.

If schools are funded to increase quality, not access, they will respond in kind.

[Docta]

Tuition Discounting Hurts Low-Income Students and Some Colleges, Study Suggests
By JOHN L. PULLEY
Chronicle of Higher Education - May 13th

The widespread practice of tuition discounting by colleges and universities has unintentionally restricted poor students' access to higher education and could undermine some institutions' finances, concludes a new report by the Lumina Foundation for Education.

The report, titled "Unintended Consequences of Tuition Discounting," analyzes student-aid data from the U.S. Department of Education and other sources. It was released on Tuesday by the nonprofit foundation, whose stated goal is to increase educational access.

Through the process known as tuition discounting, by which colleges effectively lower tuition for selected students by offering them scholarships or other institutional financial aid, institutions seek "to increase racial, ethnic, or income diversity on their campuses or to woo students who have shown superior academic performance or other special skills," the report says. And by setting variable price levels for tuition, institutions seek to maximize tuition revenue.

Lumina's analysis found, however, that while some institutions attain those goals, others do not, and that tuition discounting can result in revenue losses. If institutions balance those deficits by cutting instructional budgets or student services, they may undercut their efforts to attract and retain students. Revenue losses from tuition discounting could also imperil the financial stability of some colleges, the report says.

Despite those potential drawbacks, tuition discounting has been widely embraced, particularly among private institutions. In 2001, the average tuition-discount rate for four-year private colleges was 38.2 percent, the report says, "with nearly eight of 10 students getting discounts."

Discounts have been applied unevenly, however, and the consequences could be devastating, the report suggests.

In a comparison of data for the academic years beginning in fall 1995 and fall 1999, for example it finds that the average dollar amount of institutional grant awards rose faster for higher-income undergraduates than for their lower-income peers at both public and private four-year colleges.

At private institutions in 1999, students from families with annual incomes of less than $20,000 received average institutional aid that was 29 percent less than the average for students from families with incomes of between $60,000 and $80,000, according to the report. Four years earlier, average aid received by the less wealthy students was 2 percent higher than that of the wealthier students. As a result, lower-income students are now less likely to choose a private college, the report concludes.

The report observes "similar patterns of change" at public colleges.

Non-institutional grant aid to more-affluent students also grew at faster rates than did aid to lower-income students at both public and private four-year colleges and universities, the report says.

Lower-income students also are bearing a greater share of tuition increases than their more-affluent peers. To make ends meet, the less-wealthy students "had to borrow more, work longer hours, possibly detracting from their academic performance, and otherwise make sacrifices to meet the increased net charges."

"Tuition discounting is producing serious financial difficulties for low-income students and for their institutions," says Jerry S. Davis, Lumina's vice president for research and the author of the report. "Higher education and the supporters of higher education -- state and federal government, foundations, business, and industry -- have to all work together to remedy this situation."

Lumina, formerly the USA Group Foundation, came into being following the purchase of the USA Group, a student-loan provider, by Sallie Mae in 2000. The former corporate foundation received the sale's proceeds of $770-million, became a separate entity, and changed its name.

Not everyone agrees with Lumina's conclusions. A report on tuition discounting sponsored by the National Association of College and University Business Officers concludes that "increases in tuition and tuition-discounting policies have not adversely influenced access to independent higher education."

The report from the business officers' group bases its findings on data that indicate rising rates of college attendance among students from families with annual incomes of $15,000 to $35,000. The increase in college-going rates, however, could result from greater attendance at community colleges. The Lumina study looks only at data for undergraduate students enrolled full-time at four-year institutions.

The full text of the Lumina report is available online at the foundation's Web site. http://www.luminafoundation.org/Publications/New%20Agenda%20Series/Tuitiondiscounting.pdf

[postfeminist]

Docta said when push comes to shove the private school (and now miami) will give the slot to the full paying student every time.

I agree totally. As someone in higher ed who has been up and down the financial aid problems and funding problems a billion times, this is gonna turn out true.