Friday, October 29, 2010

Psst... Wanna Raise Tuition Revenue at 

The University of Minnesota by

44 Million Dollars? 

Here's how...

I've got a new post up on the Star-Tribune web site Community Voices:

University of Minnesota Has Lowest Out of State Tuition for BigTen Publics

After posting, I began to wonder how much revenue we could actually raise in these troubled financial times just by charging the AVERAGE BigTen out of state tuition?  

If Iowa, Michigan State, Ohio State, Indiana and Purdue can charge significantly more for out of state tuition, why can't we? [Especially since we are on the verge of becoming one of the top three public research universities in the world - by 2014, I believe.]

So check my math here.  The result seems surprising, but it looks real.

Fall 2010 Undergrad out of state enrollment (not reciprocity states) is 4,166. Source: 

If we charged the BigTen average for out of state ($26,015) instead of the current $15,293 we would increase our revenue by 44.7 million dollars... 

10,722 x 4,166 = $44,667,852


Pundy said...

I generally agree, but don't know if the U would actually gain the $40 million or so that you calculate.

First of all, I'd think the number of non-reciprocity non-resident undergraduate students would likely decrease following a tuition increase. Prior to the 2007 OOS tuition reduction, these students made up about 7 or 7.5% of all undergraduates at the U. They now account for about 13% (see data links below). Might we expect the share of these students to drop following a steep tuition increase for them?

Second, I don't have data, but wonder if UofM OOS tuition was already lower than the Big Ten average prior to 2007. Rescinding the 30% cut today would raise the OOS tuition to about $21,850 (current tuition of $15,273/70%), which would still be more than $4,000 below the Big Ten average. Is it possible that raising the OOS tuition to the Big Ten average would result in non-reciprocity non-resident enrollment share dropping to an even lower level than it was at in 2007?

So, it would seem to me that an OOS tuition increase would be likely to create more spots for qualified Minnesotans at the U, but a smaller windfall in OOS tuition dollars than you estimated.


Mr. B. said...

I agree completely with your analysis.

A practical solution is to gradually increase our out of state rates until they are the average out of state Big Ten tuition.

It really would not be fair to yank the rug out from under those who enrolled under the current rates. And yes, this may have the effect of making the U less attractive to out of staters so that more Minnesota residents will enroll. I have no problem with this.

Although it is interesting to consider that Iowa enrolls a much higher percentage of out of state students than we do with a considerably higher out of state tuition. Why do you think this is?

As to how much additional revenue this would generate, I am not sure. But I am sure that what we are doing right now is unfair to Minnesota residents and that raising out of stage tuition to its market value is in order.