LANSING – Buffeted by $285 million in state aid cuts since 2002 and recent caps on tuition increases, Michigan?s universities say their efforts to keep average tuition costs affordable are reaching a point of diminishing returns ? and threatening the state?s ability to educate its next generation of business leaders.
Two reports – one by the group representing the 15 universities, and another by the House Fiscal Agency – indicate the tuition increases needed to offset loss of state aid have been moderated by a combination of increased institutional aid, state scholarships and tax credits.
The report by the Presidents Council State Universities of Michigan follows last week’s State of the Universities address in which the institutions complained that the pattern of cuts and “price controls” in the form of tuition limits are not a sustainable model for operating quality programs at an affordable cost.
The numbers in the report are dated, drawn from the 2002-03 academic year, and the universities have faced additional cuts in state aid in each of the two years since. And on the horizon is another budget with potential cuts as the state faces the prospect of a gap between revenues and ongoing operational costs of $750 million to $1 billion.
The report says the cost for students is cheaper than it was five years earlier in 1997-98 due to the aid and tax credit packages made available to students and their families: $358 less for the average student in inflation-adjusted dollars.
Since then, Western Michigan University President Judith Bailey said there have been two years of significant budget cuts while enrollment at the 15 campuses continues to rise for the ninth consecutive year.
“We are holding the line on tuition,” Bailey, vice chair of the council, said on behalf of the campuses across the state. “But we are beginning to reach the point of diminishing returns in providing the aid to students to keep college affordable and accessible.”
The study, compiled by former House Fiscal Agency higher education analyst Hank Prince, showed real costs have dropped over the past five years to 45 percent of average in-state tuition rates from 60 percent. In inflation-adjusted dollars, average tuition and mandatory fees were $5,570 in 2002-03, a 17.1 percent increase from 1997-98, student grants and aid plus federal tax credits for parents increased 61.4 percent to $3,075.
The House Fiscal Agency report used somewhat different factors, excluded the impact of federal tax credits for families, and looked back to the 1985-86 year, as it produced a figure showing the net tuition cost was 63 percent of the average tuition cost of $5,570 in 2002-03. It noted the biggest impact on net cost in recent years was the introduction of the state Merit scholarship awards program, with net costs rising or only holding their own in years before 1999-2000.
The portion of increased financial aid provided by the universities was $1,165 compared to $955 five years earlier, and Ms. Bailey said the institutions provided much of that from amounts reserved from tuition revenue and state aid, along with income from university fundraising campaigns and endowment earnings.
She said she hoped state officials recognize that effort as they approach higher education policy and look for ways to reinvest in higher education.
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