News Release - An Increase in SUNY's Nonresident Tuition Could Hurt Some Campuses While Helping Others

NEWS

For Immediate Release –

February 22, 2010

Media contact: Heather Trela – (518) 443-5831 / communications@rockinst.org

An Increase in SUNY’s Nonresident Tuition Could Hurt Some Campuses While Helping Others, Rockefeller Institute Study Finds

Raising Charges for Out-of-State Students Might Not Boost Revenue, Given a Competitive Higher-Education Marketplace, Report Says

Albany, N.Y. — Increases in nonresident tuition and fees do not always yield increases in total revenues for universities, and may reduce out-of-state enrollments enough to offset some or all new income from such students, two education scholars conclude in a new Rockefeller Institute of Government report.

The report, Nonresident Tuition and Fees at SUNY: Rates, Policies, and Consequences, comes as New York State leaders consider recent calls for increases in tuition for students from other states who attend State University of New York colleges and universities.

A September 2009 report by the Office of the State Comptroller said SUNY could gain $85 million a year by raising its out-of-state tuition for undergraduate students to the national average. The Comptroller’s report led SUNY to ask the Rockefeller Institute of Government to analyze the impact of out-of-state tuition rates on enrollment and revenue.

The Rockefeller Institute found that, at some campuses – such as SUNY’s seven doctoral-granting research institutions – higher tuition might raise additional revenue for staffing and capital investment without harming enrollment. That’s because tuition at SUNY’s research institutions is 28 percent, or almost $5,600, lower than the national average for such institutions. But tuition at other campuses is close to the national average, so increases in student costs could weaken those institutions’ competitive positions in the higher-education marketplace, according to the report.

“Prospective students are essentially customers who are going to decide to enroll only if they think the education they will receive is worth the asking price,” authors Craig W. Abbey and Allison Armour-Garb write in the report. “If the price goes too high, enrollment could drop enough to cancel out the increased revenue per student.”

A typical nonresident student at a SUNY campus may generate more than $25,000 in local economic activity by spending $12,870 for tuition and thousands of dollars more on fees, room and board charges, books, living expenses and discretionary purchases. And each year, thousands of young adults from other states decide to stay in New York after receiving a SUNY degree – becoming permanent assets to the regional economy, especially in Upstate communities that have lost population in recent decades.

“College-educated adults are not moving to upstate New York and Long Island fast enough to make up for out-migration of young, prime-age workers,” the report says. “Decreasing SUNY’s enrollment of nonresident students could have a negative impact on the economy and demographics of New York State. Increasing enrollment could have a positive impact – particularly in regions where the young adult population is declining.”

New York is one of only four states that do not allow public, doctoral degree-granting institutions to charge higher undergraduate tuition than other campuses (South Dakota, Alaska and Idaho are the others). SUNY research centers typically attract more out-of-state applicants than other colleges in the SUNY system. Because of that competitive variation, any uniform tuition change would have differing impacts on different types of campuses, according to the study.

“An across-the-board approach to nonresident tuition increases could lead to increased revenues at some campuses, while at other campuses it might decrease revenues, undermine academic quality, and lead to economic losses in the regions where those campuses are located,” the authors wrote.

When the Pennsylvania State system raised nonresident tuition sharply between 1990 and 1996, it lost approximately 40 percent of its enrollment from outside the state. The declines in nonresident enrollment shifted more costs to state taxpayers and in-state students.

“A case study revealed that the lost nonresident student enrollment was not replaced by additional resident enrollment, and that this resulted in substantial excess capacity and a significant reduction in revenues,” Abbey and Armour-Garb wrote.

If state leaders wish to maximize revenue from nonresident tuition, the report says, “SUNY would need to take market forces into account in setting rates” – a step that is not allowed under existing law.

“Since SUNY currently sets a single nonresident tuition price for all campuses, it cannot maximize revenue. Tuition increases disproportionately impact some campuses, making it difficult to aid campuses that could charge higher rates without harming other campuses.

“In fact,” the report adds, “some campuses might find that charging a lower rate might maximize revenue. This was the case for the technology colleges when a lower associate’s degree rate was approved for the 1997-98 academic year.”

The Rockefeller Institute report is based on analysis of SUNY policies and enrollment data, a review of relevant scholarly literature, and interviews with other experts. Abbey, a nationally recognized expert on higher education finance, is assistant vice president for academic planning and budget at the University at Buffalo, and director of research at the Center for Measuring University Performance at Arizona State University. Armour-Garb is chief of staff to the New York State Commissioner of Education, and former director of education studies at the Rockefeller Institute of Government.

For a full copy of the report, visit www.rockinst.org.

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About the Rockefeller Institute of Government

The Nelson A. Rockefeller Institute of Government, at the University at Albany, is the public policy research arm of the State University of New York. The Institute conducts fiscal and programmatic research on American state and local governments. Journalists can find useful information on the Newsroom page of the Web site, www.rockinst.org.

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