As college tuition soars, fairness questions arise

5:43 PM, Aug 29, 2012   |    comments
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By Jon Marcus, The Hechinger Report

A sophomore at UC Berkeley, June Ahn comes from a family whose income is just enough to put her past the reach of much financial aid. So, like many students, Ahn is using loans to underwrite her education.

To make matters worse, she comes from Washington, not California, so she pays 2.5 times as much as in-state tuition. And she pays it even though, as an underclassman, she's still taking large-enrollment classes that cost the university much less to provide than smaller, upperclass courses and seminars.

It gives Ahn little consolation to know that some of her money is likely being used to subsidize the educations of her lower-income, in-state, and junior and senior classmates.

"I'm not in a better financial position than any of the students I would be helping to subsidize," said Ahn, whose anticipated major - political science - also is cheaper for the university to provide than majors for science and engineering students who, at UC Berkeley, are charged the same as she is. "But I have an extra almost $10,000 that I still need to pay."

As a new academic year begins, growing scrutiny of record tuition and fees is drawing new attention to the longstanding cycle of subsidies like these on which American colleges and universities depend ­- but which they would rather not discuss.

Rich kids subsidize poor kids. Out-of-state students subsidize in-state ones. Humanities majors subsidize science majors. Freshmen and sophomores subsidize juniors and seniors. Undergraduates subsidize graduate students. And international students subsidize everyone.

Now activists and legislators are pushing back against the Robin Hood-style use of some students' tuition revenues to pay for other students' financial aid. They're pressing for different prices for different subjects based on the actual cost of instruction, and, in some states, even proposing an end to a perk under which taxpayers subsidize tuition for faculty children.

Still, many families and students seem as much in the dark about these practices as airline passengers who pay different fares for similar seats on the same flight to the same place.

"If you combine general financial illiteracy with the opaque nature of college financing, it's surprising that anybody really knows what's going on," said Andrew Gillen, senior researcher at the American Council of Trustees and Alumni.

For universities, there's an advantage in this, Gillen said: "If somebody doesn't know he's paying more than the kid next to him, he doesn't get upset."

But if that student is paying full or nearly full tuition, higher education experts said, it's likely some of the money is going to lower-income classmates who aren't.

"Schools have become more aggressive in this income-redistribution aspect of higher education," said Richard Vedder, director of the Center for College Affordability and Productivity in Washington, D.C. "There's an economic-theory dimension to this, which is that there's always a small class of students who have a lot of money, and the income-maximizing enrollment manager wants to zap it to these kids."

At least 15 states have explicit policies under which some of the revenue from students who pay tuition at public universities goes to others who can't cover the full cost, according to the State Higher Education Executive Officers, or SHEEO.

Critics say this penalizes not only full-tuition-paying, high-income parents and their students, but also middle-class families already being squeezed by escalating costs. In June, the Iowa Board of Regents ordered the practice to end in that state within five years.

Out-of-state students at public universities also are increasingly subsidizing in-state students. That's because out-of-state tuition is almost always higher than in-state - 2.5 times as much for out-of-state than in-state students in the University of California system, for example.

Numbers like that are why public universities are aggressively recruiting out-of-state students. About a third of students at the universities of Illinois, Virginia and Washington now come from out of state, and nearly 40 percent at the University of Michigan and the University of Wisconsin, Madison. At UC Berkeley, the proportion is nearly 30 percent, about six times what it was as recently as 2006. At UCLA and UC San Diego, almost one in every five students is from outside California.

So in demand are out-of-state students that they're more likely to be accepted for admission to both UC Berkeley and UCLA than in-state residents whose parents' taxes subsidize the universities. The California State University system recently announced that it would not accept in-state graduate students next spring; only out-of-state students, who pay more, are welcome to apply to Cal State graduate degree programs.

At UC Berkeley, where he's starting his freshman year, Howard Chiao, who is from Taiwan, already feels like the university takes advantage of international students.

"Sometimes I just feel a little bit like the school is trying to take too much money from us," Chiao said. "It's really a huge burden for us."

Freshmen and sophomores, whose introductory courses are often taught in large groups in giant lecture halls with help from low-paid teaching assistants, subsidize juniors and seniors, who pay the same tuition but cost from 1.5 to two times more to educate, according to a SHEEO survey based on research conducted in Florida, Illinois, New York and Ohio. A member of the faculty at UCLA has separately calculated that the disparity is even greater: Classes averaging 200 students, he found, cost about $56 per student to teach at public universities, compared with $560 per student in classes averaging 20 students. Yet all are charged the same amount.

Some of the money also goes to graduate programs that are expensive to operate.

"At the large research universities, the subsidization of graduate students is monstrously large," Vedder said. "A student in a Ph.D. program sits in seminars of six and eight students taught by a professor making $150,000 a year and gets an extremely costly education. At the same university, the freshman who's taking Introduction to Psychology, Introduction to Economics, sitting in lectures of 400 people - these kids are paying the same tuition."

California Watch reporter Erica Perez contributed to this story. It was produced by The Hechinger Report in collaboration with California Watch, part of the independent, nonprofit Center for Investigative Reporting.

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