Sunday, June 2, 2013

Putting the UW System Tuition Freeze in Context

Today's Journal Sentinel has an excellent chart illustrating how the challenge of paying for college in Wisconsin has changed over time

The only problem is that neither the chart or the accompanying article addresses the likely assumption of many readers: students who can't pay these costs, even by working, are "held harmless" through financial aid.  For that reason, many say, we should simply raise tuition further and invest that additional revenue in financial aid distributed to the neediest students.

To evaluate that claim, let's take a look at the "net price" of attending UW-Madison and UW-comprehensives-- the cost paid by the poorest students after taking into account all grant/scholarship aid provided to offset the sticket price.  

At UW-Madison, for the upcoming year 2013-2014, that amount is $13,635.00 for Pell recipients with no expected family contribution.   As you can see in the chart above, that means students from families typically earning less than $30,000 a year are expected to either work 1,866 hours a year (~35 hours/week) or borrow around $68,000 (5 years is typical time-to-degree for these students at Madison).  Is this a reasonable proposition?

In addition, consider that no more than say 3-4% of UW-Madison undergraduates come from this sort of family.  After all, more than 85% of students do not receive any Pell at all. For those students, the net price is over $21,000 in the coming year (total cost in 2013-14i s $24,000).  Redistribution is helping very, very well-- and many students with substantial need deliberately overlooked by the federal "needs analysis" are being left out in the cold. It's no wonder there's now backlash against our financial aid system-- there's universal need and a narrow means-tested system. Never works. 

Now, let's turn to the UW Comprehensives. As this recent presentation from System showed, financial aid tends to reduce the price paid by students at these schools by about $2,200 or 17%.  So instead of an average sticker price of $13,000 at places like Parkside or Stout, students tend to face around $11,000. This still means taking on up to $40-50K in debt or working long hours.  The only way in which institutions can claim to meet the need of students from families earning less than $60,000 is by assuming their willingness to borrow $20,000 or more in loans-- and frankly, that is a big assumption. When these students graduate, they will have debt amounting to a third of their family's income, and despite a focus on their "future earning power" that fact will matter more to them than anything else because the primary use of those future earnings will be to help keep the family that raised them afloat. These are not students whose families can contribute to paying off their debt upon graduation- -they are far more likely to be helping to pay off the debt their families accrued thanks to the substantial opportunity costs faced by losing their child-worker while they attended college.

Other skeptics point to the availability of the 2-year colleges throughout the state, again assuming that their costs are affordable.  While tuition is indeed lower, the costs of attendance itself are not.  Students do not live at home rent free while in college any longer-- they live at home while paying rent, and while in school lose time in which they would have been working.  In addition, they get far less grant aid because their institutional resources are lower. So once again, this unchecked assumption is wrong-- and the colleges themselves know it.  Madison College has billboards posted around Dane County pointing out that students at that college accrue less debt -- not no debt.  Since when should students have to borrow to attend a 2-year community institution?

I recognize that many in the political Right want the pending UW System tuition freeze for all the wrong reasons, seeking to starve the System into submission and eventual collapse, to force the end of the public sector.  I also recognize that the freeze will do some harm to the colleges and universities throughout the state, and that harm will be disproportionately distributed.  But what exactly happens depends in great part to the behavior of System and UW-Madison. The smart response would be to seize the opportunity to ensure that state spending is focused on instruction and distributed according to the needs of the students.  The money currently flows disproportionately to the least needy students and is budgeted defensively to support many activities aside from institution.  This must stop.

1. Downsize the administrations at most universities and most significantly at UW-Madison.

2. Ensure that UW-Madison does the lion's share of the belt-tightening while requiring that it provide wage increases to faculty and staff.  In other words, compel the institution to sacrifice on behalf of its sister institutions and ensure that instruction does not suffer. Find the units in which faculty are not teaching despite have substantial undergraduate enrollment and forbid any teaching releases not paid for with research dollars.  Increase the research "buyout" rate on all grants larger than $250,000.  Ensure that athletic programs either generate revenue for the campus-- and pass it along-- or close them. Etc.

3. Commission a task force to identify one UW comprehensive university to close and re-assign willing faculty and staff to online endeavors throughout the state.  Do this only after thorough analysis and consider of cost-effectiveness and geographic needs. 

4. Create an indirect cost incentive fund at 3-5 campuses to grow funding from research.

Again, etc.

I doubt any of this will happen because System will not act as the leader it needs to be, and because Madison will be allowed to retain greater power than any other higher education institution in the state, to the great detriment of the vast majority of students.   As a result, the freeze will be followed by a sizable tuition increase.  It shouldn't-- following the freeze, tuition should go up according to something like inflation or labor costs. Nothing more.

Actors on both sides seek to protect interests other than students.  All should be called out for it. A clear and intentional move to a goal of providing universally affordable postsecondary opportunities throughout Wisconsin is long overdue.