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In July the Board of Regents at the University of Wisconsin convened to finalize the budget for the 2021-22 academic year. The Covid-19 pandemic had walloped the system, leading to a net loss of nearly $170 million as of spring 2021. Weeks before, a new state budget had freed the regents to let tuition rise for the first time in nearly a decade. State experts thought the system risked falling further behind. The time seemed to be right for a tuition hike.
“It’s a bit of a perfect storm for these institutions,” said Jason Stein, research director of the Wisconsin Policy Forum. “They have state funding that has not kept up with inflation, they have a tuition freeze that has been going for eight years. They have enrollment loss, and then they have Covid-19.”
Instead, the regents approved a budget that left tuition at 2013 levels.
Amid a broken year, colleges have faced pressure to reduce tuition, and dozens, like Wisconsin’s, even extended tuition freezes into the fall of 2021 These include Georgia’s and New York’s state systems, along with a handful of private colleges such as Texas Christian University and Butler University.
But these freezes are misleading, as the actual costs of college can actually increase for some students who may rely on financial aid to attend. Historically, freezing tuition offers marginal relief to low-income families while giving the greatest benefits to full-paying families from more affluent backgrounds, according to analysis by The Hechinger Report, which has been monitoring college prices across different sectors of higher education in its Tuition Tracker project.
“[Lowering] the sticker price is only useful if you’re wealthy enough to be paying it, and most students are not.”Phillip Levine, professor of economics, Wellesley College, and founder of MyinTuition, a net-price calculator
Student groups often pushed for tuition freezes, even before the pandemic, as a way to keep college affordable, but the benefits tend to go to those who pay the full “sticker price,” or close to it. Among public universities, 41 schools with available data kept their published tuition from rising more than 5 percent from 2010 and 2018. For students from families making $48,000 per year or less, the net price rose roughly the same amount at those schools as at schools that raised tuition by larger amounts.
A change to “the sticker price is only useful to if you’re wealthy enough to be paying it, and most students are not,” said Phillip Levine, professor of economics at Wellesley College and the founder of MyinTuition, a net-price calculator that compares actual costs across dozens of institutions.
Related: Tuition Tracker: Interactive search tool
Increasingly since the 1970s, college educations have been priced more like hotel rooms or airline tickets, with a different cost for almost every student. Discounts help attract the wealthier, full-paying students while financial aid lowers the cost for others; colleges aim to get the most money from each person, based on their ability or desire to pay.
Within the University of Wisconsin system, net price has in fact risen for many low-income students over the last decade. Only at UW-Madison and the small campus of Parkside in Kenosha have costs dropped for students from families making $48,000 or less. (Part of the drop in Madison may be due to a scholarship launched in 2018 covering tuition and fees for low-income students.)
At private colleges, sticker-price increases actually correlate with lower net prices for the least
Related: University of Chicago projected to be the first U.S. university to cost $100,000 a year
Schools putting revenue from tuition increases toward financial aid have a “better ability to target assistance to the people who are most in need,” said Stein. “The tuition freeze is simple to do. It’s simple to explain to the public. But it is not targeted.”
Beyond the costs to students, an institution with a long-term tuition freeze has less budgetary flexibility if the state does not compensate for the reduced tuition revenue. Since 2014, a year into the tuition freeze, the University of Wisconsin has seen its faculty ranks shrink, according to a report from the Wisconsin Policy Forum. UW-Madison has also had the fourth-slowest increase in research and development investment among the top 30 research universities in the U.S. between 2010 and 2018.
The wish to avoid constraints on budget and recruitment may explain why some universities have already thawed — or never agreed to freeze in the first place. Minnesota State University raised tuition this year by 3.4 percent across the board, as a state appropriations bump, budget cuts and other moves were not sufficient to cover a deficit for the system, where tuition and fees account for nearly 40 percent of annual revenues. The University of Michigan, Ann Arbor, also increased tuition, but said it will meet 100 percent of need for in-state students. The average costs for students studying on campus at Ann Arbor were lower in 2018-19 than in 2010-11 for families making $75,000 or less per year, according to federal data.
“It’s a bit of a perfect storm for these institutions. They have state funding that has not kept up with inflation, they have a tuition freeze that has been going for eight years. They have enrollment loss, and then they have Covid-19.”Jason Stein, research director of the Wisconsin Policy Forum
Tuition discounting is not without pitfalls for students. Research has shown that high listed tuitions alone may be enough to stop low-income students from even considering a college, even if financial aid covers most of the cost.
“Institutions lose students because they think it’s too expensive,” said Levine, who believes that some universities want to address that shortcoming. “There are high-level institutions that are underrepresented with lower socioeconomic-status students and are working very hard to improve that. You can’t do that if people think you charge $75,000 or $80,000 a year and can’t get through the barrier of costs.”
It will take some years to understand whether tuition discounting will continue helping low-income students or merely help colleges to hit enrollment targets following the pandemic. Enrollment estimates showed a steep decline in undergraduates in 2020-21, leaving schools fighting hard to enroll students from a smaller pool of applicants. With the number of students completing the FAFSA this fall lagging even last year’s numbers, according to Data Insight Partners, some schools may lean heavily on aid to woo students who otherwise might have paid more.
“Stanford, Duke, Williams, these types of schools, there were no changes. Those guys could survive a pandemic, every year, for a couple of centuries,” said financial aid consultant Matthew Carpenter. “It was these other private schools, of which there are many, that really tended to, right out of the gate, give more money than they typically do. Or, in many cases, come back with bigger offers after the fact. Sometimes without families even going back to negotiate.”
This story about college tuition freezes was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our higher education newsletter.
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