Tuition Monster Tamed? Don’t Relax Just Yet.

Virginia 529’s Tuition Monster

It is premature to declare victory in the effort to restore sanity to tuition decisions at Virginia’s state colleges, but several factors seem to be coming together to give students and their families a break for the coming school term. Repeat:  For the coming school term. 

One year’s pause, or “breather” to use a word bandied about during the General Assembly session, in tuition increases will not reverse the trends making Virginia higher education too expensive for many without a crushing level of debt. And this year’s pause, if it happens, took several years in a row of improving state funding to accomplish.

Those who have said that shrinking state support was the problem all along now have a good talking point.

After years of mostly-ignored pleas to hold the line on tuition, this year the legislators put an enforceable contingency on about $53 million of the $1.6 billion in state general fund support for higher education. You can read the budget provision and the individual incentive per school here.

Peter Blake, director of the State Council of Higher Education, said today he is reasonably confident based on his own conversations that most and possibly all will accept the money and hold the line. For many it is equivalent to a 2 to 4 percent tuition increase, enough so “they’re going to go along and play ball.”

He noted the $53 million with the strings attached was accompanied by additional funds for faculty salaries and need-based financial aid, with no strings. This comes at a time of flat enrollment, so the dollars per student are rising. But what happened this year may be “more episodic than long-term commitment,” Blake said. Nobody is publicly discussing next year yet.

Most of the schools still haven’t officially acted. Yesterday’s Bacon’s Rebellion report from James Toscano lists William and Mary among the schools unlikely to increase tuitions for next year, for example, but the most recent report I can find has its board reconsidering the increase it had already approved, with the meeting still to come. William and Mary now charges a four-year fixed price, so only next August’s incoming freshman are in play on this decision, but it will reduce four years of revenue projections for the school.

Some schools, including Virginia Tech, have announced that given a choice of increasing tuition or receiving a supplemental appropriation from the state contingent on freezing tuition, it will take the extra state money. Most boards will act before June.

As Tech, William and Mary, and the University of Virginia go, so will likely go the rest of them. William and Mary and Virginia have been leading the pack in raising tuition based on their perceived market appeal, and both schools have backers eager to take them fully private.

This summer SCHEV will make the final certification of which schools meet the General Assembly’s conditions and qualify for the extra appropriations. There are no caps imposed on non-E&G (education and general) fees or on tuition for out-of-state students, who may number more than 57,000 next fall.

This contingency language is the strongest action the General Assembly has taken to arrest the tuition increases since the outright tuition freeze imposed under Governor George Allen. The idea originated in the House Appropriations Committee, not with the Governor’s introduced budget, and the dollar amount grew as the schools warmed to the idea. Blake said he believes the House proposal in January was news to the schools, not a product of pre-session negotiations.

SCHEV shared quite a bit of financial information at my request, posted here for the wonks, looking at trends over a decade or so. This year’s effort to reward a tuition freeze with enhanced funding follows years of steadily improving state support, reversing a trend of shrinking support which bottomed out about 2012.

General fund support per in-state full-time four-year student was $7,637 eleven years ago, hit bottom at $5,743 in 2012, and in the coming term is estimated to be back up to $7,175, a 25 percent increase from the low point. Those are nominal dollars, of course, and with inflation factored in state support remains well below the level of the 2000s.

Helping that trend, and perhaps giving school leaders a sharper focus on price sensitivity, is continued flat enrollment overall. The in-state enrollment of 141,591 last fall was up only 2 percent from a few years earlier. Community colleges remain in decline.

Along with the general support increasing, so is the support for need-based financial aid, up 50% on a per-student basis in the past four years. This year’s budget added $15 million for that on top of the $53 million tuition freeze funds. Couple increases in need-based aid with frozen tuition and flat enrollment, and the schools can stop chasing their tails. It might even reverse the trend of colleges increasing tuition on paying students simply to transfer the money to scholarship students.

The General Assembly did impose a requirement for a public hearing as tuition and fee increases are proposed, starting next year. That bill’s success followed a major effort by Toscano’s Partners for College Affordability and Public Trust, but the law already required 30 days advance notice of any action on tuitions, and students and the public have been making plenty of noise for years.

A one-year reprieve is good news, including for legislators fighting what will be bitter reelection campaigns. Keeping the price frozen for a series of years would be a great outcome, but unlikely. Holding closer to some reasonable annual inflation measure would be a huge improvement over past years but doing even that will depend on continued efforts on general budget support and support for need-based aid. A bit more pressure on the spending side wouldn’t hurt, either.

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15 responses to “Tuition Monster Tamed? Don’t Relax Just Yet.

  1. If we accept the rule of thumb that cuts in state support for higher education have accounted for about half the tuition increases over the past couple of decades, we can expect cost pressures at public institutions (add staff, grow bureaucracy, pay big bucks to recruit big-name professors, tolerate declining teaching productivity, etc.) to continue building over time.

    Of course, restraint on the tuition front does not apply to fees, room, board, and other miscellaneous costs. The real number to follow is the total Cost of Attendance.

    • Mandatory education and general (E&G) fees are also supposed to hold to fall 2019 levels, but you are right about living expenses, other things. Athletic fees, perhaps. Time will tell.

      • Clarified: the cap is only on the mandatory E&G fees, so non E&G fees (such as the athletic fee) are not capped. So those bear watching. Think of them like the numerous rate riders on your electric bill….so hard to track….

  2. My comment below is tangential to the topic, but re: 529 Plans, it has come to my attention that some states allow donations up to April 15 for the prior tax year. That would be a nice thing GA could do for Va. college savers if that’s possible.

    • A 529 is more like a Roth IRA though – in that in both cases the contributions are not deductible and the earnings themselves are tax free.

      • Unlike Roth IRA, however Virginia 529 plan investors get a state income deduction of the amount donated. Sometimes it would be nice to decide after Dec 31 if you want to put the money aside for a given year.

        • You are correct… thanks for pointing that out!

          but also – this is a deduction not a credit which means you have to have a tax liability which usually means a pretty good income so that you actually owe taxes.

          it primarily benefits those in the higher income levels, right?

          • If you want to say anything over $80000 income is a high income person. Otherwise it helps many taxpayers.

  3. You know if someone suggested that the state “help” people get a car or a house, or worse, try to control the price of something, Libertarian and free-market types would RIGHTLY say that – that not only the price would not come down but other disruptions would happen from price controls.

    But when it comes to College Tuition – we throw all of that way of thinking away apparently.

    We’re headed in the right direction by making Community College affordable and allowing transfers to the 4 yr colleges and for those who just have to have the high-dollar product – have at it.

  4. Thanks for the thorough summary and description, Steve.
    On a side note, with admissions remaining fairly flat, where are we going to get all those additional cyber and high tech grads we promised Amazon?

    • Shhhhh. Not supposed to notice that….Perhaps all the English majors will suddenly learn higher math…

    • “On a side note, with admissions remaining fairly flat, where are we going to get all those additional cyber and high tech grads we promised Amazon?”

      At least a few of our biggest producers of computer science grads (e.g., Virginia Tech, UVA) turn away many highly qualified applicants every year. The new tech-talent investment program will provide funding for faculty and facilities to enable them to accept more students into those degree programs. More details to come over the next several months.

      • A wonderful thought. It touches on a subject too long overlooked. That is how do we retool and enhance existing education programs to meet the changing demands and needs of future employers and employees from the top to the bottom of our new society, all classes of its workers and its citizens? Here is where our biggest challenges and opportunities lie.

        Fast Forward it an aspect of that. And also a need to make our education system evolve in ways that keep it relevant. And allow it to survive in new ways, as change is coming in any case, not all of it for the better.

      • Here is another way to express the overarching problem. Today, the ever increasing costs of our educational system do NOT improve the education that our students receive. In fact, increasing costs now do the reverse. These increasing costs actively work to dilute, obstruct, and interfere with the effective education of a great majority of our students. This is proven by most all relevant data available today.

        The central solution to the cost problem is to break this funding of cost dysfunction, so that an increasing percentage of monies we now spend go directly towards increasing the quality of every student’s education, and in the process element the vast wastage of monies now spent. This is an imperative for several reasons, we have no acceptable choice really. One is that we will not be able to continue on our present course. Whether we want to or not, dwindling resources, excessive debt, cultural and demographic change, will force us to change our system, or it will go broke.

        So the solution to our cost problem must be to rework the system to save it, as well as rebuilt the education that our next generation gets, and also regenerate our state’s economy along with our students, employers, and system of education, from pre-school to post graduate. This is best done with a far leaner, more efficient and relevant teaching and learning regime.

        One the other hand, good education pays for itself. Its a great investment.

  5. Pingback: Despite Success, A Failure Warning from SCHEV? - Bacon's Rebellion

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