Tuition fee hikes ‘viable model for maintaining access’ in US

Tuition fee increases do not harm access for poor students as long as they are accompanied by robust financial aid, recent US research has suggested.

A study found that the share of low-income undergraduates – those from families earning $53,000 (£40,507) or less a year – in the University of California System rose by five percentage points to 40 per cent between 2009 and 2014 even though in-state tuition fees climbed by 45 per cent to $14,460 during that period.

There was also little difference in students’ cost-saving behaviours (such as getting a job or reducing personal spending) by income group as a result of the fee rise.

The paper, “Tuition as a path for affordability? The pursuit of a progressive tuition model at the University of California”, says that this is a “counterintuitive finding to the general perception that higher tuition equals less access to the economically vulnerable” and shows that “demanding lower or no tuition does not appear to be based on any clear analysis of the correlation of tuition and affordability”.

It adds that charging low fees or none at all at public universities correlates with “higher attrition rates and longer time to graduate”, which means that there is “less enrolment capacity” for new students to enter selective universities.

At the same time, however, there is evidence of a “middle-class squeeze”, with a marginal decline in the number of enrolled students from families earning between $106,000 and $159,000 a year. The study says that this “may partially reflect an overall decline in middle-class families in California’s population, as well as concerns over affordability and market shifts with more Californians seeking higher education in other states”.

Although 64 per cent of UC students from families earning less than $35,000 annually said that the total cost of attendance was manageable, this figure drops to 48 per cent for students from families earnings between $80,000 and $125,000.

The research was conducted by John Aubrey Douglass, senior research fellow in public policy and higher education at the University of California, Berkeley, and Patrick Lapid, economist at the Bureau of Consumer Financial Protection. It draws on data from the national Student Experience in the Research University Survey of undergraduates, conducted by Berkeley’s Center for Studies in Higher Education. The analysis focuses on survey results from the UC System in 2014, which was preceded by significant tuition fee increases and the Great Recession, but there is some comparison with data from 2012 and 2010.

The paper suggests that the increase in the share of lower-income students is in part a result of the UC System’s adoption of a “progressive tuition model” in which higher-income students are charged more to help reduce the cost and debt for lower-income students.

The campuses have done this by investing a third of tuition-fee income into institutional need-based financial aid, which replaces the previous model whereby state governments provided “subsidies to universities who then charged uniformly low tuition fees”.

As a result, some 55 per cent of UC undergraduates pay no tuition fee. There is also “greater net cost differentiation by income”, meaning that lower-income students today pay similar net costs compared with students a decade ago “with only a slight increase in their debt burden” while higher-income students pay more and take on more debt, according to the study.

The study concludes that “higher tuition rates at public universities, if accompanied by robust federal, state, and institutional financial aid, appears to be a viable path for maintaining access to lower-income students, and for generating income needed for institutions to maintain or improve student-to-faculty ratios and other measure of quality”.

ellie.bothwell@timeshighereducation.com