Healthy economy results in low tuition increases

Kane Loukas

An annual report issued last week by the National College Board indicates that average tuition at public four-year institutions increased 3.4 percent in 1998-99, the lowest year-to-year increase in a decade.
This trend will affect University students, who will pay only marginally higher tuition — 2.9 percent — than they had to last year.
Tuition rates have been able to hold their ground because of the healthy economy. As the economy grows to record levels, universities reap the benefits, passing them along to students in the form of lower fees and tuition.
“The economy has increased the spending in virtually all states, and it has increased the tax revenues,” said Thomas Gilson, a senior analyst in the University’s office of Institutional Research and Reporting. “Colleges and universities have fared well because of that.”
The University has fared especially well, partially because of the state’s above-average economic growth. As a result, next year’s expected tuition increase — 1 percent — will be the smallest in decades.
Other public universities around the country have done just as well or better.
University of California campuses cut fees by 5 percent this fall because the California Legislature gave out larger appropriations. In Michigan, public universities kept tuition increases to 3 percent. And state universities in Virginia have managed to lower tuition rates.
As with the economy, however, times haven’t always been this good. When state tax revenues wane, appropriations to the University follow suit.
For example, in 1992-93 the Legislature increased funding to the University by only 0.26 percent. The University responded by bumping tuition up 8.7 percent to defray costs.
But in better fiscal years, such as 1997-98, state appropriations to the University jumped 17.11 percent, totalling $765.67 million. During that period, tuition inched up only 2.5 percent.
Like all schools, the University has had tuition ups and downs. But overall since 1989, the University has raised tuition considerably more than the national average.
In the past decade, annual University tuition and fees increased from $2,481 to $4,602, more than 87 percent. This is 17 percent more than tuition increases at the average four-year public institution during the same period.
This higher rate has left University students paying $1,359 more per year than the average student nationwide.
There are certain basic reasons for the bigger tuition bills, such as higher heating costs in the Midwest than in many other areas of the country. Also, the University has had to spend huge amounts of money maintaining many of its older structures, some of which have recently undergone major renovations and overhauls.
The University has also made major expenditures on computers, high-speed data systems, distance-learning programs and other technology-laden investments that haven’t yet reaped financial benefits.
In most cases, slimming items that contribute to the buildup of tuition would prove impossible.
Students might be more distraught over the relatively high tuition they pay if not for the similar increases in aid.
“Institutions have been able to increase students’ financial aid, so they might not be paying more,” said Cheryl Fields, director of public affairs from the National Association of States Universities and Land Grant Colleges.
At the Twin Cities campus, total financial aid, which includes loans, grants and scholarships, rose 53.8 percent since 1989 to a current total of $184.8 million.
If the state’s economy continues to flourish in the near future, University tuition levels are expected to fall in line with the national average.

Kane Loukas welcomes comments at [email protected]