MD

The Statement

Thursday, July 24, 2014

Advertise with us »

The long hike up: Tracking the causes of the University's tuition increases

Illustration by Nolan Loh
Buy this photo

BY EMILY ORLEY

Published March 3, 2012

LSA sophomore Julian Hills is only halfway through college and he already owes more than $17,500 in loans — before interest.

Graphic by Nolan Loh
Graphic by Nolan Loh

By how much do you think that the University's annual tuition will increase next year?

Choices

More like this

Hills, whose family’s yearly income is around $70,000, is paying his way through college entirely on his own.

Hills receives various scholarships and grants from the University and other private sources. He also works as a researcher in the University’s Undergraduate Research Opportunity Program to receive work-study funding. And he takes out loans.

Though his tuition is currently fully covered by the University in the form of scholarships, grants, work-study and loans, Hills said he is always concerned that he will lose that funding.

“Any time the budget gets cut, I wonder if my scholarships are going to get cut,” Hills said. “The budget still impacts students, even if they’re on full scholarships.”

It has never been more apparent that a college degree is necessary for future career endeavors. Based on statistics released last year by the U.S. Census Bureau, 30 percent of the 61 million Americans older than 25 possess undergraduate degrees. That proportion has consistently increased since the mid-1990s.

But the amount necessary to furbish a University degree has also increased at an annual rate of 5.56 percent.

In the 2000-2001 academic year, the annual tuition for undergraduate LSA students was $6,513 for in-state students and $20,323 for out-of-state students. That $6,513 consisted of approximately 14.3 percent of a Michigan resident’s median household income.

Compared to the current academic year, tuition has nearly doubled in the past decade, costing $12,634 for in-state students and $37,782 for out-of-state students. Tuition for in-state students currently consists of 25.5 percent of a Michigan family’s median household income.

Questions abound as to who must pay for the steep rise of University tuition: the students, the University, the state or the federal government?

A degree of cost

Only recently have people begun to voice serious concerns about college affordability, according to Martha Pollack, the University’s vice provost for academic and budgetary affairs.

“The drumbeat of public discourse about (tuition) has just skyrocketed in the last year or two,” Pollack said.

Engineering freshman Jacqueline Close said her family is lower middle class. She receives around $4,000 in grants and covers the rest of her tuition through federal and private loans and a work-study job.

According to the Free Application for Federal Student Aid — a national formula that calculates a family’s expected contribution to pay for college tuition by considering income, dependents, the number of children that family has enrolled in college at the same time and other various factors — Close’s expected family contribution based on household yearly income was zero. This means that she should have been eligible for much larger grants from the University based on her financial situation.

However, the FAFSA calculator deemed her family’s cottage an asset and she didn’t get any scholarships.

“The challenge for that middle range is that this national formula does have a pretty high expected family contribution,” Pollack said. “What many students end up doing is taking additional loans to cover that. That’s how they get by. Is that a good thing? No. Unfortunately, we can’t fix that.”

Pollack said she understands that a mathematic equation doesn’t fully consider all the factors that go into covering tuition costs. She said her belief is that a strong investment in financial aid can help to fill in some of these missed holes.

Financial (first) aid

Financial aid is increasing at twice the rate that tuition is increasing.

In the 2012 fiscal year, the University distributed a record $137 million from its general budget to financial aid.

The University has a commitment to meet the full cost of attendance for Michigan in-state students through a combination of grants, work-study jobs and loans. Pollack said the University has maintained this commitment. Currently, 70 percent of in-state students receive some form of financial aid.

Scholarships, grants, work-study jobs and loans are all categorized as types of financial aid. Scholarships and grants are gift funds, while work-study jobs provide a student with funding through hours they work. Loans are funds that must be repaid with interest once a student graduates.

Central Student Government President DeAndree Watson, an LSA senior, said he wouldn’t be at the University if it weren’t for financial aid.

Watson says he is from a lower-middle class family in Detroit. His tuition is entirely covered by a scholarship given to students that graduate from Detroit Public Schools. The scholarship increases as tuition goes up.

“There is no doubt in my mind that I wouldn’t be at this school if I didn’t have (that scholarship), and I know I’m one of the lucky ones to have that,” Watson said.

Watson also said he has, at times, faced unexpected expenses, and the University's Office of Financial Aid has been able to help him with small or short-term loans.

“They’ve helped (me) bridge the gap at certain points,” Watson said. “They’ve been very supportive and I really appreciate how hard they work to make sure students have the financial resources they need to make it through college.”

The University is working to increase the amount of scholarships and need-based grants given out in order to decrease student loans, according to University spokesman Rick Fitzgerald.

“If we can reduce the loan burden, that’s a direct benefit to students,” Fitzgerald said.

Fitzgerald added that if the federal government were to provide more funding for work-study jobs on campus, an endless number of departments and facilities around campus could put students to work.

Still, loans are a significant component of what is given out by the financial aid office to cover all other expenses.

Hills said though he needs loans to cover everyday expenses, he tries to limit them as much as possible.

“It’s kind of intimidating to take out a bunch of loans and then (the government) is going to take them back, so I try to keep it to a minimum,” Hills said.

There is a cap on the amount of loans the University can give out. While the University guarantees to cover the cost of attendance for in-state students, it doesn't have the financial resources to make that commitment to out-of-state students as well.

A student could take all of the loans they’re eligible for from the financial aid office and still not have enough money to cover the costs of attending the University.

“Whenever I see tuition increases go up or whenever I see the state reduce the amount of appropriations they provide to public institutions, to me, that means that many more students are denied access to higher education,” Watson said. “And that is going to have adverse effects on our future when a significant portion of our population literally cannot obtain a college degree.”

State funding

The main reason tuition hikes occur each year at the University is because the University is receiving less and less money from the state.

“The increase in tuition is directly proportional to the decline in state appropriations,” Fitzgerald said.

Over the last decade, Michigan has dropped to 39th in the nation in state support for higher education.

In the 2002 fiscal year, the state allocated $363 million to the University. If that appropriation were to have grown at the rate of inflation according to the Detroit Consumer Price Index, the University would have received $435 million from the state in the 2012 fiscal year.

Instead, it received $269 million — a $166 million difference.

Factoring in inflation, the University has not received such little funding from the state since 1964.

In 1964, 27,790 students were enrolled in the University. In 2010, 41,924 students were enrolled. This increase in enrollment requires the University to have a larger budget to pay for things such as more teachers, improved buildings, expanded residence halls, libraries and computing centers.

In the 1960s, the state appropriation covered 78 percent of the University’s expenses, while tuition and fees covered about 19 percent. Today, those numbers have inverted. State funding has dropped to 17 percent and tuition and fees cover 69 percent of the University's budget.

The only way for the trend to reverse is for Republican Gov. Rick Snyder and state legislators to invest more resources in higher education, according to Pollack. And in a state with limited financial resources, it is difficult to convince Lansing to invest in higher education above other fields.

“We need citizens, business people,” Pollack said. “Everyone has to buy into the value of higher education and explain why it’s so important. It’s going to take some political will and it’s going to take some recognition of the value of higher education by the legislators.”

On Feb. 15, representatives of Business Leaders for Michigan went before the Michigan Senate Appropriations Subcommittee for Higher Education to argue that the trend of divesting from higher education was a huge mistake.

A main point of the testimony was that this year the state will spend 76 percent more of its general fund on prisons than on higher education. The group said it couldn't understand why the state spends more money on prisons than public universities.

Fitzgerald said Lansing needs to focus on “resetting the priorities, perhaps, for how Michigan spends its tax dollars.”

How to stop the hike

When President Barack Obama came to campus on Jan. 27, he explained the framework for a plan of shared responsibility for higher education.

In his January address to a crowd of 4,000 people at Al Glick Field House, Obama said three factors must come into play for effective financial aid reform: the federal government needs to increase financial aid, the states have to focus on reinvesting and universities must work on cost containment and efficient operation.

Obama cited the University as an example of how this plan can be successful.

“Here at Michigan, you’ve done a lot to find savings in your budget," he said. "We know this is possible.”

The University has worked to cut down its general fund budget. Since 2003, the University has slashed $235 million and has saved almost $400 million through cost sharing and other changes.

The University has cut down its expenditures by creating energy-saving programs. It also recently implemented a policy that requires departments to schedule more Friday and early morning classes to better utilize classrooms. And the University is “actively pursuing e-books,” according to Pollack, in order to cut down textbook expenses.

But there are more things the University can do, according to Watson.

On-campus housing is a large expense for students that often causes them to move off campus after their freshman year.

“My primary motivation for leaving the residence halls was because I was looking for something cheaper,” Watson said.

Pollack said she believes Obama’s plan, if executed properly and evenly, is a good fix for tuition hikes.

“If the federal government can invest in financial aid and if the state can start reinvesting at the rate of inflation, then I think we can put in place the cost containment measures to keep tuition at much more modest rates than we have previously,” Pollack said. “But you need all three of those.”


|