Office of Planning and Budgeting

Here is a quick look at some recent happenings in the world of higher education:

  • The College Scorecard confuses students and lacks desired information, says a report released today by the Center for American Progress (CAP).  The College Scorecard, which President Obama proposed last February, is an online tool to help students compare colleges’ costs, completion rates, average student-loan debt, and more.  The CAP asked focus groups of college-bound high-school students for their opinions on the scorecard’s design, content, and overall effectiveness. Student responses indicated that they did not understand the scorecard’s purpose; they would like the ability to customize the scorecard according to their interests; they want more information on student-loan debt; and they would prefer seeing four-year graduation rates, rather than six-year rates. The CAP report includes recommendations for improving the readability and usability of not just the scorecard, but of government disclosures in general.
  • The U.S. House of Representatives passed the STEM Jobs Act on Friday by a 245 to 139 vote. The bill would eliminate the “diversity visa program,” which currently distributes 55,000 visas per year to people from countries with low rates of immigration to the U.S.  Those visas would instead go to foreign graduates from U.S. universities who earn advanced degrees in science, technology, engineering or mathematics (STEM). Proponents of the Republican-backed bill say it would keep “highly trained, in-demand” workers in the U.S., boosting the nation’s economy and preserving its global competitiveness. While the White House and most Democrats support the expansion of STEM visas, they oppose the bill’s attempt to eliminate the diversity visa program. Consequently, the measure is unlikely to pass the Democrat-controlled Senate.
  • The overlapping agendas of Texas, Florida, and Wisconsin governors could signal a new Republican approach to higher education policy, says Inside Higher Ed. The three governors agree on cost-cutting strategies such as requiring some colleges to offer $10,000 bachelor’s degrees; limiting tuition increases at flagship institutions; linking institutions’ graduation rates to state appropriations; and letting performance indicators, such as student evaluations, determine faculty salaries.  Although the governors’ proposed reforms appeal to some voters, “actions taken by all three have been sharply criticized not only by faculty members and higher education leaders in their states, but also by national leaders, who view the erosion of state funding and increased restrictions on what institutions can do a breach of the traditional relationship between state lawmakers and public colleges and universities.”

Here are a few noteworthy headlines from the past few days of higher education news:

  • History professors at the University of Florida are fighting a proposed differential tuition strategy that would hold tuition rates stable for “high-skill, high-wage, high-demand” degree programs for at least three years.  Most STEM degrees made the list of majors recommended for this tuition freeze, while core Humanities disciplines (such as history) did not.  The Governor-commissioned task force responsible for the proposal said, “The theory is that students in ‘non-strategic majors,’ by paying higher tuition, will help subsidize students in the ‘strategic’ majors, thus creating a greater demand for the targeted programs and more graduates from these programs, as well.”  Supporters feel such an approach will provide taxpayers with the maximum return on their investment and “improve the university system overall.”   However, the opposition, championed by a number of history professors, argues the strategy would detract from the university’s prestige and lead to a less “richly educated” workforce.  Over 1,300 faculty from Florida and beyond have petitioned Florida Governor Rick Scott to seek faculty input for future decisions regarding Florida’s higher education system.  This particular form of differential tuition contrasts with the more typical, cost-driven approach, under which students in majors that cost the university more to provide (such as STEM fields) are charged higher tuition than students studying less expensive subjects (like history).
  • Carnegie Corporation President, Vartan Gregorian, is advocating for a presidential commission on higher education to “generate the kind of attention and urgency that the circumstances demanded for the nation to keep its competitive edge.”  The commission’s mandate would be to address the many challenges confronting higher education (cost, access, etc.) and help policy makers determine its future.  Given the drastic demographic, technological, and economic changes already occurring in higher ed, Mr. Gregorian believes now is the appropriate time to discuss nation-wide reform.
  • Apprenticeships are becoming more popular in the U.S. as a means of bridging the disconnect between what students learn in college and what their future employers actually want them to know.   Several Harvard professors, inspired by Germany’s “dual system” of providing students with practical job-related skills and theoretical instruction, are working with six states to establish apprenticeship programs.

Last week, a Los Angeles Times/USC poll found that support for Proposition 30 is dwindling. Only 46 percent of registered voters now approve the California ballot initiative designed to deflect almost $1-billion in state higher-education cuts—a 9-point drop over last month’s poll by the same organizations. Meanwhile, 42 percent of respondents oppose the proposition.

If Prop 30 passes:

  • The state’s sales tax would increase by 0.25 percent through 2016;
  • Californians earning more than $250,000 would pay higher income taxes through 2018;
  • The resulting $6 to 8.5 billion in additional revenue generated each year would allow the state to continue its current level of higher education funding into, at least, the coming year; and
  • The University of California system would freeze undergraduate tuition rates.

If Prop 30 fails:

  • California community colleges would lose $338 million;
  • The California State system would lose $250 million—requiring the system to lay off (by their estimate) 1,500 faculty and staff, reduce next year’s Fall enrollment by about 20,000 students, and increase tuition and fees for in-state students by 5 percent; and
  • The University of California system would lose $375 million—resulting in, as System officials declared, a tuition increase of as much as 20 percent.

Proponents of Prop 30 face resistance from the state’s fiscal conservatives and competition from another ballot initiative, Proposition 38, which would raise income taxes through 2024 and direct most of the $10 billion per year in revenue toward K-12. If both bills pass, California’s constitution requires that the proposition with the most votes cancel out the other. This is because Prop 30 and Prop 38 both increase personal income tax rates and could, therefore, be seen as conflicting. However, Prop 38 appears to have little momentum, relative to Prop 30 and it is unlikely that both bills will pass.

A recent Insider Higher Education article describes the inventive deals that a handful of public universities are pursuing in an effort to keep tuition rates from rising. By offering tuition freezes in exchange for either (1) increased state funding or (2) individual student efforts to graduate on time, universities hope to meet public demands to stabilize tuition and also ease the financial burden of doing so.

1. Public institutions can afford tuition freezes if states pick up the slack. On several occasions, the University System of Maryland has successfully encouraged state lawmakers to “buy down” potential tuition increases. And just last Friday, the University of Minnesota’s Board of Regents accepted a proposal to freeze undergraduate resident tuition if the state provides an additional $42.6 million over the coming two years. This approach has been successful in some states, but the article mentions a major problem: “many states simply don’t have the money or the political will to invest in education at the moment.” However, even when schools do not expect to receive more state support, these proposals may at least spark conversations about the crucial linkage between falling state appropriations and rising tuition rates.

2. Benefits of better on-time graduation rates may be enough to offset costs of tuition freezes. Getting more students to graduate sooner can improve a university’s ranking, lower its students’ average debt, and make room for more incoming students. For some schools, this is enough incentive to provide tuition freezes in a targeted manner. Last week, leaders of the Indiana University system offered to freeze tuition for students who have earned 60 credits by the end of their sophomore year and are, therefore, on track to graduate within four years. Additionally, UT-Austin will pilot a program next year that would award students who receive Federal Direct Unsubsidized Loans with $1,000 of loan forgiveness for each semester they stay on pace to graduate in four years. UT-Austin’s Director of Student Financial Services said the program could save students up to $12,000 over the course of their education.

As public institutions continue to face dwindling state appropriations and increased pressure to stabilize tuition, we may see more of these innovative proposals.

The NY Times reports that researchers at the Brookings Institution have summarized why college is worth it. Their chart shows the percent of people at each income level who have various levels of educational attainment. Not surprisingly, the conclusion is that more education opens the gateway to better, higher-paying jobs.

A few findings to consider:

  • Of the Americans who earn over $150,000, 82 percent had a bachelor’s degree.
  • An individual with only a high school diploma is twice as likely, relative to someone with a college degree, to earn less than $40,000 per year.
  • Conversely, an individual with a college degree is 9 times more likely to make over $100,000 and 13 times more likely to make more than $200,000 per year when compared to someone with only a high school diploma.

Although half of all UW undergraduates graduate with zero debt, even when factoring in debt, college is still a great investment. The same researchers developed another chart showing the return on investing in one’s higher education relative to the return on investing comparable tuition money in the stock market, long-term Treasury bills, housing, corporate bonds or gold.

Once again, the numbers show that postsecondary education opens the door to higher-paying jobs and more opportunities.

AAUP released its annual academic salary information this week. The data show, once again, that faculty salaries have not kept up with inflation, that they have not increased significantly over many years, and that the pay gap between professors at public and private institutions continues to grow.

Although these data do not address the rapidly increasing costs of benefits (healthcare especially), they do make clear that the growing cost of tuition is not primarily driven by increasing faculty salaries, a popular argument. Don’t expect that explanation to fall out of favor, however, as previous years of data have seemed to make no impact on its prevalence.

In a Town Hall Seattle meeting last night, Washington’s six public baccalaureate university presidents and business leaders from REI, Boeing, and Microsoft gathered to discuss  unprecedented cuts to Washington’s public institutions and generate energy for the Seattle Times’ Greater Good Campaign. Organized by the Seattle Times and funded in partnership with local businesses, the campaign intends to expand awareness of the importance of higher education for the vitality and economic security of our communities and advocate for increased funding for public higher education.

Last night, the public baccalaureate presidents expressed their concerns with retaining star faculty, providing access to low and particularly middle-income students who don’t benefit from state-supported financial aid programs, and maintaining affordable tuition rates. Business leaders shared their devotion to the Pacific Northwest, but their worries that our state’s inability to educate enough of its citizens may force their companies to look elsewhere for educated workers.

When moderator and Seattle Times editor Kate Riley asked President Young about his impressions of President Obama’s State of the Union address and blueprint for higher education reform, Young said, “They’ve got the guns aimed at the wrong problem.” In Washington, per student funding has remained flat for twenty years, but resources to support educational funding have completely switched. While the state used to provide 70 percent of the per student funding in the early 1990′s, the state now only provides 30 percent. The total funding remains the same but the primary shareholders of our public universities are now students and parents, not the state.

Footage from the event is available here.

Kiplinger has released a map showing average student debt versus average income across all fifty states, as well as categorizing institutions they have identified as the most expensive and the ‘best values’.  The UW comes in as the 10th best value public institution in the nation for 2010-11.

The map illustrates that Washington state students have a relatively low debt to income ratio: Average student debt is between $15,000 and $20,000, while average income is around $40,000 to $50,000, with about 61 percent of all students in the state taking out loans. Utah boasts the smallest amount of debt per student (under $15,000), while New Hampshire has the highest average debt load (over $25,000 per student).

These state level data are consistent with our most recent UW data. In 2009-10, 50 percent of all UW undergraduates borrowed and their average cumulative debt was $19,500. Although these figures are lower than the national average, they have increased over the last several years, especially as state funding cuts have necessitated tuition increases. This is why the UW Board of Regents voted to substantially increase the UW’s commitment to financial aid for resident undergraduate students starting this fall.

Note that Kiplinger also shows that students appear to be increasing their use of credit cards while in college, with 84 percent of students holding at least one credit card and half of all students holding four or more. The mean credit card balance was a record $3,173.

As of July 15, all UW Global Challenge State Peers had approved resident undergraduate tuition increases for the upcoming 2011‐12 academic year. See the latest OPB brief for details.

Despite implementing a 20 percent tuition increase for resident undergraduates, the University of Washington, which has consistently ranked as the least expensive among the GCS peers, will continue to rank in the bottom third of the peer group in 2011‐12.

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.

← Previous Page