VCU Ponders Risky 5.3% Tuition Hike

VCU President Michael Rao: Hard choices ahead

Last month I wrote how Virginia Commonwealth University was eyeing an undergraduate tuition increase of 3% to 5% to make up for cuts in state support. Well, it appears that VCU is now looking at the upper bound of that estimate. VCU students would need to pay about 5.3% more in tuition and fees next year to close an estimated $19.1 million funding gap, Karol Kain Gray, VCU’s vice president for finance and budget, said at Board of Visitors budget workshop yesterday, according to the Richmond Times-Dispatch.

Clearly, VCU is between a rock and a hard place. As I noted in March, VCU already has the third-highest tuition of any public, four-year institution in the state. In contrast to the University of Virginia and the College of William & Mary, which are perceived as elite institutions with ample leeway to increase tuition, the VCU brand might not be strong enough to push through higher charges without suffering a drop in applications.

“Being new here, I can tell you we are lean and mean,” Gray said. But if the board members want VCU to be as competitive as its peer institutions, she added, they need to fund a tuition increase. In the latest U.S. News & World-Report ranking of the “best” colleges and universities, VCU ranks 164th nationally among all higher-ed institutions and 87th among public institutions.

The board discussion brought to light one of VCU’s big problems in the consumer-perception game: the low percentage of tenured and tenure-track faculty.

The fact that the university has fewer tenured and tenure-track professors is a sign that VCU is operating at a “lower” level than its peer institutions like the University of Virginia, Virginia Tech and the College of William & Mary, Gray said. Adjunct and non-tenured professors tend to not cost as much to employ.

Only 35 percent of VCU’s professors are tenured or tenure-track, compared with 57 percent at U.Va., 62 percent at Virginia Tech and 65 percent at the College of William & Mary.

This brings out a weakness in the VCU business model that had not been readily apparent before. VCU charges a high tuition (by the standards of a public Virginia university) even though its academic cost structure, and by extension the relative prestige of its faculty, is low.

As we’ve discussed elsewhere on Bacon’s Rebellion, the percentage of tenured and tenure-track faculty may be overrated as a metric of educational quality. Speaking of higher-ed generally, tenured faculty members enjoy sweet deals that allow them to teach less and and pursue more research, writing and outside income-generating opportunities. So, a low percentage of tenured faculty does not necessarily imply that VCU students are getting a worse education. But when it comes to pushing through big tuition increases, what matters is perception.

In the U.S. News & World-Report rankings methodology, “undergraduate academic reputation” counts for 22.5% of the score. Reputation is derived from the results of two surveys: an “academic peer assessment,” which counts for 2/3 of the 22.5%, and a high school counselor survey, which counts for 1/3. I am making an assumption here, but I expect that the academics who respond to the US News & World-Report survey base their responses on the scholarly reputations of their peers — books, articles, papers published, conferences attended, etc. — and not their prowess as teachers. If I’m right about that, VCU, with only 35% of its faculty on the tenure track, probably does not score well in this category. (Unfortunately, U.S. News & World-Report does not publish this number, so I cannot say for certain.)

As high school graduates weigh cost, academic reputation and educational value, an aggressive tuition increase at VCU can have only a dampening effect on applications. The 2015 fall acceptance rate at VCU was 72%. Declining applications can set into effect scoring dynamics that could impact the university’s reputation, thus driving down rankings and starting a vicious cycle.

“Student selectivity” counts for 12.5% of the U.S. News & World-Report ranking. One-tenth of that 12.5% is determined by the acceptance rate. A lower acceptance rate is considered more prestigious, a higher rate less prestigious. Assuming VCU accepts the same number of students to fill the same number of slots, a decline in applications would push the acceptance rate even higher. Likewise, as the university becomes less selective in accepting students, it tends to accept students with lower SAT scores. Standardized test scores count for 65% of the student selectivity component.

A 5.3% tuition increase can get VCU over the fiscal hump next year. But the board will need to pay close attention to the market consequences. Will fewer students apply to VCU? Will VCU become less selective in whom it accepts? Will average SAT scores decline? Will its U.S. News & World-Report rankings fall? A big tuition hike creates a big risk.

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22 responses to “VCU Ponders Risky 5.3% Tuition Hike”

  1. The self-confessed arms race toward elevated reputation is not helping institutions nor students. There will still be a first and a last, and many in betweens, while lots of money is spent chasing their tails.

  2. LarrytheG Avatar

    Imagine if you went shopping for a car – and they told you , you had guaranteed financing for almost any car on the lot.. how much would you worry about the quality or actual cost of the car as long as you were guaranteed delivery?

    I think that is what is going on now days with the Federal loan program and the Universities know it and feel much more immune from careful “shopping” than if people were having to fork over their own money up front before attending.

    it’s going to end badly. So there.. now I’m with the critics!

    1. If you look at Jim Bacon’s other piece today on college loans, you will see that that this is already not working, as default rates are steeper.

  3. Larry, for once, I agree with you at least a bit. But in this case, if you can’t pay for the “car”, they can’t repossess it from you. You’ve already paid the tuition and fees and they can’t reclaim it by reclaiming a faculty research sabbatical, rock climbing wall, or part of a football scholarship from the university.

    The government and taxpayers are left with the bill. There was a 17% increase in student loan defaults in 2016. $137B is in default. Another $70B+ is in forbearance or deferment due to hardship, unemployment (reasons that are concerning). And the average amount owed continues to rise, going up 6% last year alone and 17% since beginning of 2014.

  4. What is shocking to me is how few teachers are tenure track now. The article cites 57% at UVA, 62% at Tech, and 65% at W&M as being some sort of exemplars. I think these numbers were in the 80-90% range not too long ago.

    Universities are employing lower cost adjuncts (and graduate assistants) to teach and are letting the tenured faculty have lighter loads to do research and other things. This is what students are getting for the huge increases in tuition and fees.

    1. LarrytheG Avatar

      Izzo – doesn’t fewer tenure indicated a desire to lower costs?

      1. Reallocation of resources–no savings passed on to students.

  5. Yes, they are cheaper. But universities use them to free up tenure tracks from teaching so they can do more research and other things. My point was student costs go up and up but it is funding things other than their instruction.

  6. Jim, a background question. VCU, once upon a time, was the product of a forced marriage between the venerable Medical College of Virginia with its teaching hospital, and a little arts school called Richmond Professional Institute. We’re 50 years way beyond that now, with a huge investment in undergrad facilities, faculty and housing, but when you say “tuition” will increase 6.3%, are you talking about undergraduate only? If this includes graduate, is there a undergrad-only number?

    1. The 5.3% increase is for undergraduate tuition. I have updated the post to make that clear.

      For what it’s worth, VCU had a terrible reputation when I arrived in Richmond 32 years ago. MCV had a good reputation but the old RPI was regarded as a university of last resort. The university has come a long way since then. I have to say, it’s an institution that Richmonders can take pride in. But at what cost to students who pay the 3rd highest tuition in the state?

      1. Thanks, 6.3 was a typo.

        Yes, RPI has come a long way to be VCU. Other products of that Godwin higher education initiative include, of course, ODU, GMU, JMU, Longwood, Radford, MWU, CNU — how lucky we are in Virginia to have these alongside the originals, UVa, W&M and VT.. What your post suggests is that the task of creating modern universities out of barely adequate predecessors still remains an unfinished process, especially from the point of view of faculty expertise and reputation. I wonder if VCU is typical of the group in this?

  7. LocalGovGuy Avatar

    This is another reason that U.Va. and William & Mary need to be privatized.

    The reality is that both of those schools are on another level. They have the alums and prestige that they’re going to operate as elite academic institutions regardless of the General Assembly’s actions. If you don’t like U.S. News rankings, another very good measure of a school’s academics is admission to Ivy League graduate and professional programs. U.Va. and W&M’s alums attending those schools outnumber all other Virginia state schools combined.

    The Virginia Techs, VCUs, GMUs, ODUs, etc. can all point to U.Va. and William and Mary and “justify” their expenditures as “keeping up with other state schools.” They lose that fig leaf of an argument if the state allows U.Va. and William & Mary to go private.

    1. I’m intrigued by your statement that UVa and W&M grads are far more likely to get into Ivy League graduate/professional programs. Do you have any documentation for that?

      1. LocalGovGuy Avatar

        For example, here are the top feeder schools to Stanford Business School (maybe not in the Ivy League athletic conference, but I’d put them in the same classification as the Ivies):

        When I did some higher ed consulting and had more access to numbers, U.Va. usually had enough at all of the top grad/professional programs to have more than all the rest of the state schools combined (except if you put W&M in the latter category).

        I do remember once seeing the numerical breakdown from Wharton of undergrad institutions attended for a ten year period. U.Va. had twice as many alums graduate from Wharton than all of the other state schools combined including W&M.

        1. LocalGovGuy, This is fascinating data, and it reflects really well on UVa, which was the No. 5 feeder school to Stanford Business School. It strikes me that this kind of data, if it were available on a wider scale, would be a much more objective measure of a university’s academic reputation than the peer surveys that U.S. News & World-Report conducts.

          (Speaking of the U.S. News academic peer survey, I read an article about a Clemson University official who described how the university systematically clawed its way up the U.S. News rankings. One tactic was to denigrate all other institutions in the academic peer survey in order to improve Clemson’s comparative score on the survey.)

  8. Yale Law school is usually considered the most coveted law admit. They report represented institutions here for students enrolled in Fall of 2015. UVA has 6, William and Mary 3, and Virginia Tech 2, Washington and Lee 2.

    Let’s not get carried away with ourselves, though. Amherst College (enrollment 1792) has 18, Dartmouth College 19, Harvard 65 . . .

    This page ESTIMATES feeder schools to Harvard Business School (a top benchmark for MBAs) with 1% or more. UVA comes in at 1.1%. But again, to put in perspective, Dartmouth comes in at 2.7%. Dartmouth has 4,300 undergraduates, UVA has about 16,000. So a Dartmouth grad is quite a bit more likely to end up at HBS.

    1. LocalGovGuy Avatar

      That pretty much makes the point: U.Va. and W&M have 9 at Yale Law, the rest of the state schools have 2. (I’m not considering W&L a “state” school for purposes of my post as it is a private school.)

    1. LocalGovGuy Avatar

      As an HBS alum, that looks pretty close to the same make up as when I graduated years ago. Ivies, Duke, NW, West Point, NYU, BYU, Georgetown, the public Ivies, and some international schools. Our class did have quite a few Vandy alums, so that’s about the only difference I see.

  9. This opens up an entirely new, and equally fascinating, discussion of Virginia colleges and universities as feeder schools for graduate/professional schools. This raises the stakes for kids to get into UVa or W&M. Not only are those universities desirable in their own right, but they are feeder schools to the most prestigious institutions in the nation. Thus, getting bumped from UVa to, say, Tech or Mason, might well foreclose the possibility of ever getting into Yale law school or Harvard business school.

    This kind of info would seem to be critical for anyone considering where to attend college — at least those with aspirations of getting an advanced degree. I don’t think you can get that data at US News & World-Report.

  10. I think it speaks to the psychology of the situation. There is a belief that if you don’t get into that school of your choice or reach school, some life opportunities will not be available to you. (I’m not convinced of that.) It helps drive the willingness to spend, both for universities and applicant families. It also creates pressure to make more spots available at the top publics.

  11. […] the most important issue not discussed is one I raised in a recent post, “VCU Ponders Risky 5.3% Tuition Hike.” VCU offers a dubious value proposition. It charges the second highest tuition & fees […]

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