Office of Planning and Budgeting

During a special meeting this morning, the UW Board of Regents unanimously approved 2011-12 tuition rates, the FY 2012 operating budget, and the FY 2012 capital budget. In their first exercise setting tuition rates without caps imposed by the Washington State Legislature, Regents approved a 20 percent increase (or $1,624) for resident undergraduate tuition rates next year (4 percent higher than the increase approved by the Legislature in the operating budget), bringing total tuition to $9,746. With required fees, tuition and fees will total $10,574. Nonresident undergraduate tuition will increase 10 percent to $27,230. Graduate and professional tuition rates will increase at varying rates, which can be found on page 5 of the operating budget.

Note that increases in undergraduate resident tuition will be met with significant increases in financial aid. The UW will increase the amount of tuition revenue set aside for resident undergraduate financial aid by 45 percent ($12 million). More information on financial aid is available in the two-page information item posted at the end of this blog.

The operating and capital budgets were first considered during public information-only, regular May 12 meeting of the Board of Regents and several tuition proposals detailing different rate options and revenue data were considered by Regents at a public information-only, regular meeting on June 9.

Please contact our office (or post comments directly via this blog) with any questions you may have about next year’s budgets and tuition rates. Also, please review a two-page UW Resident Undergraduate Tuition Information Item for a brief summary of tuition and financial aid during the coming academic year.

The Georgetown University Center on Education and the Workforce has released another report projecting an increasing need for college graduates in the US workforce. Like last year’s report, the new report, “The Undereducated American”, argues that there is an existing under-supply of college educated workers, evidenced by the very high college wage premium, and projects an increasing need for workers with a college education in the future, which will exacerbate this wage imbalance, as well as stunt economic growth.

The report predicts that the demand for college educated workers (including those with ‘some college’ as well as those with AA, BA and graduate degrees) will increase by about 2 percent per year between now and 2025, while the US is currently on track to increase the supply of college educated workers by only 1 percent per year. They recommend that the US produce 2.6 percent more college educated workers per year, another 20 million students total between now and 2025, to not only meet the increased demand, but to increase supply enough to bring the college wage premium down significantly (but still in line with other developed nations) and reduce overall income inequality in the US.

Most importantly, this report provides ample evidence that there is not an oversupply of college educated workers in the US economy, despite it being fashionable to assert that college might ‘no longer be worth it’ given the combination of economic distress and the rising cost of college. In fact, the college wage premium (the difference between what the average college educated worker is paid compared to a non-college educated worker) remains sky high in the US at 74 percent, contributing to growing income inequality in the US. The data show that not only do college educated workers dominate the highest paid positions in the US, but they make significantly more money than non college educated workers even within the same types of jobs.

Read the report to discover more about why they settle on the recommendation of producing 20 million more college educated workers (and a projected college wage premium closer to 46 percent), and to see detailed data on wage and employment trends by occupation and education.

Last week, Oregon Legislators signed a state budget that, among other things, cut funding for public higher education by 17 percent. It is unknown whether this cut will necessitate tuition increases above those already approved earlier this month by the Oregon State Board of Higher Education, including an 8.8 percent increase at Oregon State University and a 7.3 percent increase at the University of Oregon for resident students.

In the meantime, the Oregon Legislature is expected to pass a bill intended to help Oregon public higher education achieve greater long-term stability by ending state agency status for the institutions, enabling new flexibilities in managing and spending resources. In addition to freeing institutions from state processes guiding building projects and repairs, contracting, and employment, the bill ensures that institutions keep all interest earned on tuition revenue, and adds three members to the State Board of Education. In exchange, the institutions must meet agreed upon performance targets regarding enrollment, graduation, and other measures.

According to a new report on Net Price by the College Board, tuition and fees, adjusted for inflation and offset by federal grants and tax benefits, are actually lower than they were five years ago. Although tuition and fees rose steadily over the past five years, grants and financial aid outpaced this growth, leading to a net decrease in the actual average price paid by students. The decrease affected both public two-and four-year institutions and private four-year colleges, but were most marked at private schools, where tuition increased by 4.6 percent and financial aid increased by 7 percent this year.

In all, inflation-adjusted net tuition at private schools has decreased 11.2 percent in five years. At public four-year institutions, low-income students generally received grant money that covered all of tuition and fees, with about $1,720 left over for other educational expenses. These findings seem to suggest a shift to a high-tuition, high-aid model in higher education, especially as state investment in colleges and universities declines.

The College Board reported similar findings last year, a summary of which can be found here. To read more about how the UW seeks to make higher education accessible to all students, check out the financial aid website and the Husky Promise program.

Recent news has some wondering whether unsuccessful attempts by some public flagship institutions to obtain greater autonomy from the state, and in some cases from a larger university system, have led to negative consequences for the university presidents pushing for the reforms.

Having been strongly criticized by University of Wisconsin system officials and Chancellors for her leadership in working with Wisconsin governor Scott Walker to work out a deal that would allow the Madison campus to split off from the system and enjoy a considerable increase in management and financial autonomy, Chancellor Biddy Martin has announced that she is leaving UW Madison for Amherst College after only three years. In an interview with the Chronicle of Higher Education, Martin claims that the failed attempt to separate the Madison campus from the system is not the reason she is leaving, although she does admit that the strain of budget cuts and politics of leading a large public university may have played some role in her departure.

It appears more clear that University of Oregon President Richard Lariviere, who also led a charge to separate his institution from the greater system, was punished for that effort as the State Board of Education made a point to renew his contract for only one year (when three is standard), and added conditions that he participate more in the efforts of the system as a whole.

Meanwhile, two other presidents of large public research institutions, the University of Arizona and the University of Massachusetts, are facing questions about their leadership over the past several tumultuous years.

Yesterday, the Washington State Economic Revenue and Forecast Council released a troubling update for 2011-13 state general fund revenue. Overall, the over $730 million dollars held in reserve in the recently signed budget is now projected to be only $163 million.

If this trend continues, mid-year and supplemental session cuts may be likely. Please see our OPB brief for a summary of this revenue report.

A new State Higher Education Executive Officers (SHEEO) report indicates that institutions of higher education have increased their educational efficiency by decreasing their staff-to-student ratio since 2001. Using three IPEDS data surveys—the Fall Staff survey, 12-month Enrollment survey, and Institutional Characteristics survey—it was calculated that, although both enrollment and staffing have increased between 2001 and 2009, staffing has increased at a far slower rate. At research universities with very high research activity, like the University of Washington, staff levels increased only 6 percent while student enrollment increased by 19 percent. This suggests that higher education institutions have found ways to educate more students with fewer staff. Further findings included:

  • Clerical, secretarial, technical, service, maintenance and crafts staff levels declined steadily over the 8-year period (2001-2009)
  • Faculty, graduate, and other professional staff levels fluctuated more, but tended to increase, showing that universities focused on ensuring instructional quality to keep pace with higher student enrollment
  • Executive and administrative staff levels stayed constant
  • For very high activity research institutions, both full- and part-time employment per 100 student FTE declined (by 12 and 8 percent, respectively)

Altogether, universities with very high research activity and large hospitals like the UW employed around 40 staff per 100 student FTE in 2009, down from 45 in 2001. These data indicate that universities have been innovative in their response to steadily increasing enrollment by focusing staff resources on instruction and streamlining administrative and clerical processes. For more information, check out other UW efficiency initiatives or read the full SHEEO report.

Days after the Department of Education released its finalized Gainful Employment rule, Senator Tom Harkin held his fifth Senate hearing investigating the practices of the for-profit higher education industry. Senator Harkin focused the hearing on the high levels of student borrowing and outsized loan default rates for students at for-profit institutions. Previous hearings and reports have revealed that:

  • Less than 10% of postsecondary students are enrolled in for-profits, yet they receive 23% of federal aid, and account for 44% of all loan defaults.
  • 95% of all students at for-profits borrow money to attend, compared to less than a quarter of community college students, 64% of students at public four year institutions, and 72% at private four year institutions.

Additionally, Harkin grilled Department of Education Under Secretary Martha Kanter on whether the softened gainful employment rule released by the Department would do enough to help reign in exploitative practices of the for-profit higher education industry, noting that stock prices in the industry increased significantly upon publication of the revised rule whereas previous iterations had sent prices down. Kanter, who was attending in place of Secretary Arne Duncan, defended the regulation as a step forward.

Harkin concluded that while the Department of Education regulations were ‘better than nothing’, he continues to believe that Congressional action via legislation may be necessary.

No Republican members of the committee were present, and no further hearings on the topic are scheduled at this time.

For previous OPBlog posts on this topic see:

After much debate, public comment, intense lobbying, a lawsuit, and the threat of political action to block them, expansive new US Department of Education higher education regulations are set to go into effect on July 1st.  While the Department has made revisions to and provided implementation guidance for most of the new rules, it had several times delayed finalizing the most controversial regulation, known as Gainful Employment, which was formally published on June 2nd.

The rule  establishes thresholds for loan repayment rates and debt to income ratios for graduates of for-profit and non-degree career oriented programs, with the ability to cut off federal financial aid funding for entities that do not meet the standards, among other penalties. The final rule was significantly revised from earlier versions, including a delayed implementation year, altered criteria and formulas making it more difficult to find an institution in violation of the rule, and a host of other changes that are widely seen as having softened the rule in response to the pressure applied by the for-profit industry and its political supporters.

Although the gainful employment rule is limited in scope and does not currently apply to degree programs at traditional institutions, as we have previously stated, and both The Chronicle and Inside Higher Education are reporting, the regulation is a watershed moment with important implications for federal regulation of higher education into the future.

As the New York Times reported in late May, hiring of recent college graduates is up five percent from last spring—encouraging news for UW students graduating in a few days’ time. The Seattle Times confirmed that this trend is followed in Washington State as well, with the unemployment rate falling from 9.2 percent in April to 9.1 percent in May. Seniors seem more confident and optimistic as local companies like Amazon and Boeing announce their intent to hire more professionals, particularly in the science and technology fields.

Unfortunately, the impact of the recession is still felt by many looking for jobs. Less than a third of college graduates have jobs lined up before graduation, and only 70 percent find one within six months. Some college graduates are forced to take jobs unrelated to their degree, and many—according to the New York  Times, close to 49 percent—take jobs that do not require degrees at all, which edges out high school graduates and teenagers looking for work. Finally, median salaries for college graduates have decreased from $30,000 in 2006/7 to $27,000 in 2009/10.

According to graduates the New York Times and the Seattle Times interviewed, the best way to land a job in tough economic times is networking—most seniors with jobs lined up after graduation had found the position through an acquaintance or college job fair. Many students indicated they wished their schools had done more to prepare them for job hunting.

To see what the UW is doing to help students find jobs in the current economy, check out the UW Career Center website, which offers a wealth of job-related information and services, including résumé building, networking opportunities, career fairs, and mock interviews. For more detailed information on official unemployment statistics, visit the Bureau of Labor Statistics website.

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