NC legislature’s plan to freeze some tuition, lower others raises concerns

N.C. State students Logan Moore, left, and Maddie Mesaros study for an organic chemistry test at the Hunt Library at N.C. State University on Wednesday, June 29, 2016 in Raleigh.
N.C. State students Logan Moore, left, and Maddie Mesaros study for an organic chemistry test at the Hunt Library at N.C. State University on Wednesday, June 29, 2016 in Raleigh.

Billy Vaughn, 46, has one daughter enrolled at N.C. State and another looking to follow in her sister’s footsteps.

If Gov. Pat McCrory signs the state budget the legislature sent him July 1, Vaughn can expect to pay a fixed price for tuition over four years for his younger daughter.

The same is true for the entire in-state undergraduate population of the UNC system – currently about 160,000 students – starting this fall. While the tuition freeze wouldn’t apply to current students, it would affect more than 40,000 incoming students.

The fixed tuition rate for UNC-system students, as long as they graduate in four years, is one of a number of new approaches in the state budget to help North Carolina students and families pay for education at a public university. Also included: limits on fee increases imposed by universities; and $500 tuition per semester at three campuses – Elizabeth City State University, UNC-Pembroke and Western Carolina University. (A proposal to have ECSU change its name was dropped.)

For parents and students who have struggled with ever-increasing tuition and fees, the plan holds the promise of budget relief.

“Predictability is probably the No. 1 (priority),” Vaughn said. “You can manage your costs a little bit better. Knowing it’s not going to go up makes the decision process a little bit easier.”

The tuition freeze and 3 percent cap on student fee increases might help families with financial planning, but there are concerns about the long-term consequences.

A fixed rate gives universities less flexibility to deal with economic ups and downs. Projecting tuition upfront for a four-year period is tricky, and it could lead to each successive enrolling class being charged a different rate.

Students who must work their way through college might not be able to graduate in four years – making it more expensive for them to graduate.

The biggest fear is that costs would dramatically rise over time with each new incoming class.

Jennifer Delaney, associate professor of higher education at the University of Illinois at Urbana-Champaign, said guaranteed-tuition laws are not entirely effective in promoting affordability.

Delaney studied the effects of similar legislation in Illinois, the Truth-in-Tuition law, that went into effect in fall 2004. She found that, on average, since the law went into effect, the state’s 12 public institutions had increased annual tuition by approximately 26 percent to 30 percent more than schools not subject to the law.

At least six states have policies that allow or require state universities to have guaranteed tuition rates, according to a report last year from the National Conference of State Legislatures.

The College of William and Mary in Virginia implemented its W&M Promise in 2013, guaranteeing a tuition rate for Virginia residents for four years. College officials pointed out that a Virginia student who enrolled in another state public university that year ended up facing an average tuition increase of 14.3 percent by 2015, compared with zero for a William and Mary student who started in the same year.

But the college announced a 12-percent higher tuition rate for its incoming first-year students this fall.

Delaney said such laws “tend to be very short lived, maybe one or two years” because of shifting makeups within state legislatures, a decline in state appropriations to schools, economic downturns and other factors.

“If there isn’t additional revenue, there’s pressure on those institutions to lift those caps in a shorter time frame,” Delaney said.

Tuition rising

The tuition freeze comes at a time when college affordability has become a central theme among political leaders on both sides of the aisle.

Republican legislators have talked about how the middle class is being priced out of higher education. They also cite the state constitution’s mandate that a university education, “as far as practicable” be free of expense. UNC president Margaret Spellings has also made affordability one of her key priorities.

In North Carolina, the average cost of in-state tuition and fees during the 2015-16 academic year was $6,970. The College Board

Last week, presumptive Democratic presidential nominee, Hillary Clinton, unveiled her plan for free public university tuition for students from families with income up to $125,000. She has also touted debt-free public higher education.

In North Carolina, the average cost of in-state tuition and fees during the 2015-16 academic year was $6,970, making it the ninth most affordable state for a college education, according to The College Board.

Although the cost is low compared to other states, North Carolina has seen one of the highest increases over the past five years. Even when accounting for inflation, in-state students at UNC-system schools saw a 20 percent spike in tuition and fees. Ten states experienced a larger increase. College Board data show Maine as the only state whose public universities cost less than they did five years ago.

Tuition has been rising at all 16 universities in the UNC system. In recent years, the sharpest in-state tuition increases have occurred at East Carolina University, UNC-Greensboro, Appalachian State University, UNC-Pembroke and UNC-Asheville.

“Tuition increases should be moderate and predictable,” said Will Doyle, associate professor of higher education at Vanderbilt University. “One of the guidelines that I’ve used in the past as a suggestion is don’t increase tuition more than (the state’s) median family income ... has increased from one year to the next. Increase tuition at the rate families can afford to pay for it.”

Adjusting for inflation, median household income in North Carolina has increased less than 6 percent in the past five years, according to The County Health Rankings & Roadmaps program.

The plan runs the risk of hurting students who are unable to complete their education in four years. Many students at UNC schools work their way through college. UNC-Charlotte Chancellor Philip Dubois pointed out that “the fixed tuition will benefit a larger proportion of students on campuses where it is more common for students to complete their academic programs in eight consecutive semesters.”

If a student doesn’t finish in eight semesters (or 10 if they’re enrolled in a designated five-year program), the tuition for any additional semesters reverts to the current tuition at the school, plus a 50 percent tuition surcharge if applicable.

Implementation uncertain

With McCrory expected to sign the budget as early as this week, the question now becomes how the tuition plan will be carried out.

Provisions in the state budget include $40 million in appropriations for Western Carolina University, UNC-Pembroke and Elizabeth City State University to offset lost tuition revenue and $250,000 to Elizabeth City State for to promote enrollment. But the budget does not mention how the state would help offset the revenue lost from the fee caps and tuition freezes for the UNC-system campuses.

Dubois, the UNC-Charlotte chancellor, said tracking tuition on each student would require getting IT systems ready. How much that would cost is uncertain. He also acknowledged the budgetary challenge in predicting future costs. UNC-system officials say they don’t have a plan yet for how they would implement a fixed tuition plan.

Joni Worthington, vice president for communications for the UNC system, said the finance staff told her “the mechanics of how the fixed tuition guarantee is to be implemented will be worked out this fall.”

Staff writer Jane Stancill contributed to this report

Bryan Anderson: 919-829-8934, @BryanRAnderson