Review committee recommendation could lead to different tuition rates based on major

The system is proposed as a potential solution to the budget deficit caused by lack of funds from the state and dwindling enrollment numbers.

After five years of working in the field, the median salary for an electrical engineering major was about $65,000 in 2014. For an elementary education major working for the same amount of time, the median salary was $34,000. At MU, those students would have paid the same tuition rate to get those degrees.

But if the UM System adopts a recommendation made by the UM System Review Commission, a group appointed by the state legislature, the student who is now paid nearly twice as much may be paying more for their education.

Differential tuition is a system that has been implemented by universities around the nation as a way to raise revenue in the face of funding cuts from state legislatures. Instead of setting the tuition price for all students, schools with differential tuition systems have different rates for different majors — which are usually determined by the price of providing that degree.

In a differential tuition system, STEM majors that require several lab courses, as well as majors where graduates generally have higher starting salaries, such as business and accounting, are on a higher price scale than other majors.

“Certain programs are simply more expensive than others to deliver,” said John Gahl, an engineering professor and Faculty Council member.

Proponents of differential tuition say that the system allows schools to increase revenue without imposing a significant school-wide tuition increase, and that those with pricier majors are typically in fields with higher starting salaries — making more loans easier to pay off.

On the other hand, some are apprehensive about pricing out some students from these higher-salary majors to begin with, which can specifically affect lower-income students and may therefore lead to decreased racial and gender diversity in those majors. According to some research, this trade-off could compromise how effective differential tuition may be at bringing in revenue.

What we have now

Currently, all students pay the same base tuition rate, regardless of major. But each major also has supplemental fees associated with each credit hour — which are not regulated by the state, nor are they typically included in students’ initial tuition estimates.

Instead, these supplemental fees are levied by individual schools and colleges and are adjusted to cover the fees associated with the major.

“I already pay extra engineering fees for my college to provide for the research-heavy nature of my degree,” engineering student Kelsey Ollis said. “So it is not fair to increase my tuition even more.”

Much is still unknown about how the system would look at UM campuses, or if supplemental fees would be reduced if differential tuition were implemented.

Missouri businessman and former Republican gubernatorial candidate Dave Spence worked on the Workforce Readiness, Program Analytics, and Articulation section of the report. Spence said that they focused primarily on workforce readiness and made the recommendation with the expectation that the Board of Curators would do further research about it.

“We didn’t really do a deep dive on that,” he said. “We just thought it was an interesting concept that was worthy of further discussion.”

Spence said it will be the curators’ job to take a closer look at the differential tuition option. UM System spokesman John Fougere said the curators were unable to comment.

“We continue to review the suggestions from the Review Commission as they relate to tuition and finance, and will consider adopting those suggestions in the report that help us further the University’s mission,” Fougere said in an email.

Other differential programs

As of 2012, 143 public colleges across the nation had some kind of differential tuition system in place.

While most schools typically tailor tuition rates to different academic programs, some differentiate based on level of courses being taken (tuition rate increases for higher-level classes, regardless of major), and some schools only impose different rates for master's, doctoral or other professional degree programs.

The University of Kansas has differential tuition in place for some of its programs, including its business and engineering schools. KU spokeswoman Erinn Barcomb-Peterson said each of the departments began implementing this system at different times.

“We are confident that our tuition and fee structures are finding the right balance of affordability and quality,” she said.

Despite an apparent decrease in total enrollment from fall 2015 to fall 2016, the percentage of people in both the engineering and business schools, and as compared to other majors, has increased according to the KU’s tuition numbers from the past three years.

However, this is not the case at every school.

The question of equity

Though there are many factors that could affect how tuition is altered to meet the demands created by the budget deficit, Gahl said fairness should be taken into consideration.

“If there is a degree program that costs ‘x,’ and there is a degree program that costs ‘3x,’ do we charge both students ‘2x?’ Is that fair to the student whose degree program only costs ‘x’ to deliver?” Gahl said. “I think that’s a perfectly appropriate question to ask, and I think a committee should look at.”

Typically, students who have majors in STEM will be more expensive to educate than students in other areas because of the costs associated with lab and research facilities.

Additionally, Spence said that since some majors yield higher starting salaries after graduation than others, charging more for those majors makes sense because, theoretically, those students will have an easier time paying off their education after graduation.

However, that leaves the risk of reducing accessibility for some students on the front end.

Ollis is a senior industrial engineering student who will be continuing her education at MU next semester for graduate school. She said that setting a higher tuition rate for students in her program would make it less accessible to people with lower incomes.

“It’s going to be it making it more difficult for underprivileged students to get a STEM major when STEM majors are already pretty inaccessible,” she said. “I think it is going to decrease the number of STEM majors, as well.”

According to a 2013 study published by the National Bureau of Economic Research, public universities that have a differential tuition system have seen a change in the number of students in different majors, specifically away from those with higher tuition rates. The study analyzed 161 public research universities; 74 of them had differential tuition systems.

With the exception of nursing, which actually showed an increased number of students after differential tuition was implemented, the study found that a smaller fraction of students at these universities were getting their degrees in programs affected by differential tuition.

The researchers found that the number of engineering degrees are the most elastic — meaning those universities saw a greater decrease in the number of degrees than other majors given the same price hike.

The number of business degrees, though slightly less elastic, were still shown to be affected by differential tuition systems.

The study also noted that both female and minority students are disproportionately affected by the differential tuition systems, despite the fact that those two groups typically get more institutional aid than white males.

Steven Chaffin is an MU senior and the executive director of the Associated Students of the University of Missouri, which advocates for the interests of UM students at the state legislature. Though ASUM has not yet formed an official opinion about differential tuition, Chaffin said he was concerned that raising tuition in certain degrees — ones that often result in higher starting salaries — may price out students from lower socioeconomic statuses.

“This is worrisome, because it reduces the ability of lower income students from using their college career as a means of upward mobility,” he said.

‘Righting the ship’

According to reporting from the Columbia Missourian, state support for UM System schools, when factoring in inflation, has decreased by 15 percent since 1990. In the past month alone, $38 million was cut from the UM System for the semester.

The cuts are not likely to stop any time soon. In Gov. Eric Greitens’ proposed 2018 fiscal year budget, about $40.4 million will be cut from the UM System.

Among other factors, the review commission cited shrinking government support as a reason to consider a differential tuition system.

In the case of MU, dwindling enrollment exacerbates the issue.

Gahl has been a professor in the engineering school for 17 years and serves as the chair of the Faculty Council Fiscal Affairs Committee. He said that MU, like many other universities strapped for state funding, has relied heavily on growth in the student population to maintain adequate income.

“When we were depending on growth so much just to maintain steady state … if anything were to happen — whether it was controversial or not — in regard to enrollment, it was going to have a dramatic impact on our ability to fund the enterprise,” Gahl said.

Freshman enrollment for 2016-17 fell by 21.1 percent from the year before, which resulted in a $36.3 million loss in tuition dollars for this academic year.

Spence said action will need to be taken, given the current financial state of the UM System.

“You can’t sit back and say, ‘Woe is us,’ and play the victim,” Spence said. “You’ve got to go out and figure out how to right the ship.”

Looking forward

Though the suggestion to examine differential tuition was made at the end of 2016, a potential switch would not be enacted for at least another year. Since there are only four more months of this fiscal year, which does not leave enough time to create a new tuition scale, Gahl said the earliest a new system would be put in place would be fall 2018.

Earlier this semester, interim Chancellor Hank Foley announced the creation of three campus-wide committees that will examine infrastructure, monetary allocation and revenue issues. The committee that looks at revenue will likely discuss the possibility of implementing differential tuition.

Vice Provost of Finance Rhonda Gibler said the chancellor’s office will announce how the committees will be selected soon, but did not give a specific timeline.

Gahl said the committee’s focus will be broader than determining how the university will increase its income.

“It is not just a tactical issue of how to raise more money,” he said. “There also needs to be a very sober evaluation of what we think the university should be.”

Edited by Emily Gallion |

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