Staggering Tuition

There’s nothing new about putting a price on prestige, and now, the idea of paying more for a better brand is moving to the University of California system. Financial problems are old news — a reduction in state funding has already led to staff layoffs, tuition increases and cuts in class offerings, all of which started a couple of years ago.  Having exhausted these options and already downsized the universities to their bare bones (rest in peace, CLICS), the UC Board of Regents has proposed a new tactic: different tuition for different campuses. According to the March 9 article in the Los Angeles Times, the regents are considering allowing the 10 UC campuses determine their own undergraduate tuition within a predetermined range, which would result in tuition being staggered by “consumer demand.” This idea has been used at other large state systems — notably the University of Texas system, which our very own Mark G. Yudof was once president of — and it might make the money-crunched schools a few extra bucks, but the lack of specificity with the proposal in general is making it a weak solution to deal with the UC’s crippled budget.

In lieu of recent funding cuts, Governor Jerry Brown proposed in January to reduce the UC budget by $500 million in the 2011-12 state budget. The suggestion of staggered tuition is the brainchild of the UC Commission on the Future, a panel studying UC system reforms. Though the concept is still in its early stages, meaning there’s few concrete numbers to analyze, it still brings up numerous doubts, including questions about who would decide on rates, how schools would be impacted and whether staggered tuition would destroy the goal of a unified UC system.

Currently, undergraduate tuition within the UC system costs about $11,618 per year at each campus. UC Berkeley Chancellor Robert J. Birgeneau suggested that, under the new plan, the regents set a midpoint for undergraduate tuition and allow campuses to vary tuition to 25 percent above or below the median.

This leads to the question of who will determine the tuition of each campus. According to UC Office of the President spokesperson Ricardo Vasquez, the new plan would likely have the chancellors of the individual universities determining the tuition. The exact method of doing so — based on how high the demand is to attend — is still undetermined, though Vazquez said that one possibility is basing tuition rates on annual freshmen and transfer application numbers. Other ways demand may be calculated, though it is unlikely, given Vazquez’s statement, are by U.S. News and World Report ratings, freshmen and transfer yield rates or even number of Nobel Laureates.

Staggered tuition is not a revolutionary idea, but its results have not been very promising. Universities in Texas, Wisconsin and New York all currently implement this system. For example, the Austin campus at the University of Texas plans to charge as much as $4,900 in tuition and basic student fees starting Fall 2011, compared to about $3,500 for the El Paso campus. This can lead to a self-fulfilling prophecy: the more tuition UT-Austin charges, proving its superiority, the more it can continue to attract noted faculty and staff — including nine Nobel Laureates — and a more national student body. Currently, Austin places 45th on the U.S. News and World Report’s national universities list. None of the other UT schools are highly ranked, and while UT Austin maintains strong rankings, UT campuses in El Paso and Arlington continue to sink in their perceived prestige.

While this staggered tuition proposal would raise more funds for the UC system overall that the campuses could share — and reward colleges that have greater demand — under such a plan, the regents may be unable to keep campuses in check. Transitioning to this structure now, at a time when no school wants to lower tuition in the face of a shrinking budget, will likely create destructive competition among UC campuses. UC Santa Cruz Chancellor George Blumenthal predicted that if different undergraduate tuition rates were allowed, all UC campuses would quickly raise fees, not wanting to be left behind in reputation or money. This mad scramble to the top would be counterproductive and in the end, hurt students as much as the UC campuses themselves. The proposal also reduces the unity of the university system by taking power away from the regents, who currently serves as a system-wide governing board. Aside from setting the tuition range, the regents won’t have a hand in deciding fees.

If the university institutes varied tuition based on application rate, a degree at UCLA or UC Berkeley — which receive roughly 51,000 and 44,000 freshman and transfer applications a year, respectively — would cost more than one at UC Merced, which receives about 11,000 annual freshmen applications. This would exacerbate the already present fragmentation of the UC campuses (nobody is going to argue that Berkeley is on par with Merced). But by staggering tuition, the UC Regents are confirming that a lower-tier UC education is not worth the same amount as a flagship school, which is like giving up on the lower-ranked schools before they have a chance to ascend. As the costs of undergraduate attendance begin to vary at UC schools, some campuses like Riverside and Merced will further suffer in terms of their perceived reputation and academic quality. Ultimately, this situation could make it more difficult for the “lower-tier” universities to recruit high-quality faculty, staff and students, further dividing the UC system. Blumenthal asserted that varying undergraduate tuition rates among schools would damage the concept of an interconnected university system. “I think it has been an enormous benefit to the state of California and the taxpayers of California to have a uniform tuition,” he said.

To avoid some of the pitfalls that other universities have experienced, the UC Board of Regents ought to maintain full control over setting rates rather than delegating it to chancellors, who will have trouble seeing the bigger picture of staggered tuition when working for the benefit of their individual university. The UC Regents would be able to make centralized decisions that aren’t just limited to setting a medium tuition price — thereby effectively clarifying future problems with this tuition proposal.

Though staggered tuition may eventually become necessary, the regents should strive for a unified campus system for as long as possible.