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Who Pays the Piper Calls the Tune

UNCís low-tuition policy has some unexpected downsides.

By Jane S. Shaw

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January 12, 2009

A lot of people are exercised over whether or not the University of North Carolina system should raise tuition next year. This annual process of setting tuition is always divisive, but this year the economic crisis and budget cuts are making the process more difficult, and more emotional, than usual. Revenues are down, the state has less money to spend, many students’ families have less income to spend on tuition, and university administrators are looking for any means to fill their declining coffers.

We at the Pope Center believe that higher education is too expensive; students could be taught—and taught better—for much less than it costs now. But that does not necessarily translate into keeping lids on tuition extremely tight. In this essay, I will explain why.

But first, the context. North Carolina already charges its students less than most states. Kiplinger’s consistently ranks UNC-Chapel Hill as the best college value in the nation because it combines quality and affordability. Tuition and fees at all UNC schools are all in the lowest quarter of the group of peer institutions (those universities to which each school makes benchmark comparisons). In fact, the state’s low tuition makes a mockery of the recent “Measuring Up” report by the California-based National Center for Public Policy and Higher Education, which gave all states except California an F for affordability.

UNC is trying to keep tuition increases low and predictable, limiting them to 6.5 per cent a year (except for debt service fees). The latest proposals are still under discussion, but they average 3.8 per cent. Something like that will probably carry the day, and over the short term, this seems right.

Over the longer term, however, what are North Carolinians getting for their commitment to keeping the price of education down? It may be less than it seems at first.

Low tuition is not always as fair as people think—or even always beneficial for students.

Keep in mind that low tuition is not the same as “low cost.” Students pay less in North Carolina because taxpayers are footing a large portion of the bill. According to UNC system president Erskine Bowles, throughout the system about 70 per cent of the expenses for a student’s instruction are covered by state appropriations. Tuition covers only about 30 per cent, on average. At Chapel Hill, which has enthusiastic alumni and large private donors, state support of student instruction is somewhat less, about 60 per cent.

Many students from wealthy families pay $16,370 to live and study at UNC-Chapel Hill. This compares to $40,000 or more at private schools such as Wake Forest, Duke, and Vanderbilt. We have to ask, should wealthy families really be paying only 40 percent of the cost of their children’s education?

The taxpayer is paying the remaining 60 percent. Yet only about one-fourth of North Carolina’s adults have college degrees. That means that construction workers, sales clerks, and short-order cooks are contributing to the education of affluent students who will themselves go on to make large amounts of money, thanks in part to their Carolina degrees.

So fairness is not an open-and-shut case.

Additionally, while low tuition is attractive to students, it often results in a variety of problems that can prolong the amount of time it takes to earn a degree. Most colleges and universities routinely pay lip service to how well they serve their students’ needs, but the reality doesn’t always match their promotional literature.

Schools cut corners. At large institutions such as N.C. State, for example, it’s often hard to get into the classes you want, either because they are full or because they are not offered very often (or both). If you don’t select your major soon enough, you may have to wait for additional semesters to go by, delaying your graduation. It’s standard practice in some of our leading universities to seat students before often-unprepared graduate assistants in giant lecture rooms .

In my view, one reason why students get slighted is that the universities inevitably pay more attention to the people who provide the big bucks—the legislature—than to those who provide fewer bucks—the students.

There’s an expression, “Who pays the piper calls the tune.” If you are providing the money, you can expect your interests to be satisfied. If students (and their parents) were paying the full cost of their tuition bill, they would demand more and would probably get it.

What we often see instead is compromise. With tuition low (and loans available), many students take a few courses, stop and work awhile, then go back, puttering along. They are “in school” but they aren’t focused on getting that degree; they lack the motivation that they would have if they (or their families) were paying larger amounts of money. Many do not graduate. And the low price attracts people who would be better off seeking other options than a college degree to waste their time in college. Ironically, low tuition may help explain the low graduation rates that plague many of our public universities in North Carolina.

In contrast, legislators are paying most of the academic piper’s wages, and they often have goals other than making university education the best it can be. For example, legislators like to support on-campus centers of research, advocacy, and business incubation, even K-12 education.

Thus we have scores of centers and institutes ranging in mission from the UNC Environmental Finance Center to the Western Carolina Public Policy Institute. They may have merit, but they are not focused on student education. To the extent that the taxpayers fund them (and that extent varies), college students are being shortchanged.

All in all, because of the motivational problems caused by low tuition, and because of some doubt about its fairness, I am skeptical that North Carolina’s low-tuition policy is the best. Although I sympathize with students’ (and parents’) desire for low tuition, it is also appropriate for us to scrutinize the full effects, including the unintended consequences—for both students and taxpayers.

 


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