UVa board mulls increased tuition, enrollment

VIRGINIA BEACH — At a time of dwindling state support for higher education, the University of Virginia’s Board of Visitors is pondering several major actions — most notably, higher tuition for in-state and out-of-state undergraduate students and a sizable increase in enrollment — that would aim to ensure a more secure financial future for the university.

“We are at a point where we think it’s time to take some bold moves,” said Leonard W. Sandridge, UVa’s executive vice president and chief operating officer, speaking to the board at its retreat Saturday in Virginia Beach.

Over the last three years, the state has slashed UVa’s general fund appropriation by $36.8 million, or an average of $2,876 per student. The university is expecting yet another reduction of $14.7 million in fiscal 2012, pushing UVa’s total state budget cut to beyond $50 million in four years.

At their retreat, members of the board weighed a number of options to generate new revenue that would allow UVa to maintain its current options and invest to improve its academic offerings.

One idea, outlined in a white paper written by board member Austin Ligon — the co-founder and former CEO of CarMax — would be to increase UVa’s tuition and fees to the “full market rate.”

“Tuition increases are the most straightforward avenue to producing the additional funds the university needs to accomplish its goals,” Ligon wrote.

UVa’s tuition is slightly higher than the average cost of its competing public universities, but is priced far below the average of its fellow institutions ranked among the nation’s Top 25 colleges and universities, nearly all of which are private.

The average tuition price tag at UVa’s public and private peer institutions was $21,284 for in-state students and $35,858 for out-of-state students during the 2009-10 academic year. At UVa, tuition and fees were $9,872 for in-state students and $31,872 for out-of-state students.
“We do have some ability to influence our pricing, our tuition,” Sandridge said.

Sandridge pointed out that UVa’s School of Law set its tuition at the true market rate and therefore has more resources to maintain its spot as a Top 10-ranked law school. For 2010-11, UVa’s law school’s tuition and fees are $47,500.

“Candidly, that’s sort of what it takes to have the kind of quality they’re striving for,” he said.

Colette Sheehy, UVa’s vice president for management and budget, said the board could continue increasing the university’s tuition each year, or could “reset” the price of undergraduate tuition to better reflect the market rate.

Another idea, Sheehy said, would be to set different tuition rates for different courses of study. For example, high-cost majors such as nursing or engineering might carry a higher tuition. One problem, however, is that the costliest majors are often the majors that lead to the most high-demand careers and increasing the price of a diploma might dissuade students from entering those fields.

Along with any major tuition increase, however, there must be an accompanying expansion of UVa’s financial aid program, AccessUVa, to ensure the university remains affordable to students from middle-income families, said several participants in Saturday’s meeting.

“Middle income is probably a group that we have not reached out to enough,” Sandridge said. “We could probably do a better job.”
In his white paper, Ligon agreed.

“A strong logical argument can be made, as President [John T. Casteen III] notes in his farewell message, for moving to full market rate tuition and fees minus per-student state contribution,” Ligon wrote. “This would be combined with an expansion of AccessUVa to ‘neutralize’ the impact on currently qualified students, combined with some increase in aid to reduce the increased burden on ‘middle income’ students. This ‘high tuition/high aid’ model would produce an additional $183.2 million per year before considering the cost of AccessUVa …”

The “most obvious, and least politically controversial,” option, Ligon wrote, is to rely on tuition and fee increases for out-of-state students. For example, he said, adding a $1,000 tuition increase for entering out-of-state students while keeping in-state tuition increases as is, could produce an additional $14 million per year by 2014-15.

Increased enrollment

Along with raising tuition rates, the university is also eyeing a more rapid growth in enrollment beyond its current growth rate of 1 percent more students each year.

The university’s growth over the past 20 years has not kept pace with the increasing number of qualified applicants. In 1994, UVa admitted 45 percent of its applicants. Today, that figure has fallen to 32 percent. Among in-state students alone, UVa’s admissions rate dropped from 61 percent in 1994 to 45 percent in fall 2010.

Consequently, UVa is rejecting a substantial and growing number of qualified in-state students. In Northern Virginia, for example, a total of 578 applicants at or above UVa’s SAT average were turned away this year, Ligon wrote.

Members of the General Assembly, faced with constituents angry over their children’s rejection letter from UVa, have introduced legislation to place a cap on the percentage or number of out-of-state students enrolled, thereby freeing up slots for in-state students.

UVa currently admits 69 percent in-state students and 31 percent out-of-state students. In-state students pay just 63 percent of the cost of their education at UVa, whereas out-of-state students must pay 239 percent of their educational costs.

As a result, changing the ratio could devastate the university’s finances. A 20 percent undergraduate cap on out-of-state students, for example, would carve out $32 million from the university’s budget.

“If we had to go to 75 [percent in-state] and 25 [percent out-of-state], the cost to us, the burden that would have to be picked up, is very large,” said UVa Rector John O. Wynne.

“Candidly,” Sandridge added, “we are dependent on out-of-state students for support.”

Rather than altering the in-state/out-of-state ratios, UVa officials said, a better idea would be to increase total enrollment, creating more spots available for both in-state and out-of-state students.

Ligon’s white paper examines two enrollment scenarios. In one, UVa would grow by 400 students per year for five years, then resume its 1 percent growth rate. This would bring UVa’s enrollment in line with the University of North Carolina at Chapel Hill.

In the other scenario, UVa would admit 500 more students per year for a decade. UVa would thereby grow to the size of the University of California at San Diego, Ligon wrote.

With a larger student population, UVa officials note, they could achieve several economies of scale in terms of research funding, alumni giving and more.

Professor productivity

In concert with boosting tuition and enrollment size, the university is also weighing ways it might increase productivity and efficiency.
One suggestion was to push a number of professors to teach additional courses.

A professor currently teaching two classes, Wynne said, might feasibly pick up a third.

“That could increase their time in the classroom by a third,” he said. “It probably wouldn’t cost a third more to do that.”

Another idea was to add classes on Fridays and Saturdays.

Yet another suggestion was to encourage students, particularly those with highly popular majors such as history or economics, to complete their degree in three, rather than four, years.