The trend has persisted. One recent report found that, since 2002, state support for higher education in Michigan has declined 30 percent, when adjusted for inflation. The university, like nearly every other state school in the nation, leaned on tuition to make up the difference. In-state tuition rose, but university leaders also focused on another, more lucrative, funding stream: out-of-state students — many of them elite students from wealthy families who couldn’t get into the Ivy League. Michigan was the next best thing.
In its annual survey of four-year colleges and universities, the credit rating agency said private institutions project net tuition revenue — the money earned from students after colleges provide financial aid — will climb about 2.4 percent in fiscal 2018. Meanwhile, public universities anticipate a 2 percent growth rate during that period due to pricing constraints and shifting demographics. Moody’s polled a total of 280 of the colleges and universities it rates for the survey.
Two years ago, Folsom Lake College began a partnership with the city of Rancho Cordova to provide a fee waiver for residents who were recent high school graduates. Funding comes from a half-cent sales tax levied by the city. The program, still in its first cohort of students, is overwhelmingly popular, Robinson said, and student success rates are up as well.
States could save money and increase college-graduation rates by providing modest financial incentives for students to choose private colleges over comparable public ones, according to a report released this week. The conclusion, which was quickly disputed by a group representing public colleges, comes at a time when a growing number of states are providing the opposite incentives.
Much has been written about the broken business model of higher education, focusing on rising costs, ever-higher tuition, and mounting student debt. However, an increasingly important but rarely discussed issue is the weakening of the traditional partnership between universities (both public and private) and private philanthropic foundations.
After an enrollment dip earlier this decade, however, UMUC has begun a process of unbundling, paring the institution down to what President Javier Miyares calls its “academic core” to monetize its own services, grow its endowment and keep tuition rates low.
UW Flex established a different revenue model: instead of charging by the credit hour, the program charges a set price for all students, based on a subscription period, during which students have “all-you-can-learn” access to the curriculum. This means that for those students who work through the online program quickly, a UW Flex degree will end up being substantially cheaper. For others, the cost may end up being equivalent to a traditional program.
The governor proposes allowing municipalities facing “financial hardship” to cut spending on low-achieving schools starting next school year. Malloy would leave it up to municipal leaders to determine how to spend the additional revenue they would get from his budget. The governor also proposes the state’s share of school construction project costs be scaled back and that state spending on after-school and summer school programs that provide tutoring for students be significantly cut. Additionally, he proposes cities and towns pick up one-third of the cost of providing retired teachers and other school staff with pensions, and he proposes a new way to fund special education.
Although warnings about the changing demographics of college-age students were first issued earlier this decade by the commission, many small colleges ignored the predictions. And now their lack of a strategy to diversify the enrollment pipeline is putting financial strain on the bottom line, especially in a student market where tuition prices continue to increase year after year as family incomes lag.
Some campuses are countering the rising cost trend in an unexpected way: adding more degree programs. Georgia Tech is among hundreds of schools looking to attract more students and invite more private support through the establishment of new academic offerings.