2017 Fiscal Year State Budget, NC Budget and Tax Center

Making college affordable by possibly killing off public universities

One of the major issues that Senator Berger and Brown have heard from their constituents is that the rising cost of tuition at the state’s public universities is making it difficult for parents to send their kids to college or for kids to complete their degrees. The Senate’s answer in the form of Senate Bill 873 is unlikely to make sure that a four-year degree remains affordable and accessible. Instead, it will almost certainly limit access to public universities for students of color and those living in more rural parts of the state, as well as harm their communities’ economic development efforts.

Senate Bill 873, included in the Senate’s budget proposal, targets students at five specified colleges and universities, which have a rich history as HBCUs, the state’s university serving American Indians, and a rural institution. These five institutions would see their tuition capped at $1,000 for the year for in-state students and $2,500 for out of state students. Capping tuition at these institutions would mean a significant loss of revenue for each respective institution – ranging from an estimated nearly $3.9 million to more than $29 million among the five institutions.

Copy of Senate Bill 873 (HBCUs)_tuition cap analysis

And if the tuition cap is not a big enough hurdle to overcome, the mandatory reduction in fees (combined with the tuition reduction and cap) will certainly heighten the financial challenges faced by these institutions. These fee reductions would mean additional estimated annual revenue loss that ranges from around $6 million to $15 million.

For the majority of these institutions, which have faced the challenges of building endowments,sustaining their institutions through segregation and Jim Crow, and serving a disproportionately low-income student body, the tuition cap is a blunt instrument that will only serve to erode the institutions’ fiscal stability and ability to support every student’s completion of a four-year degree.  It fails to ensure that those who can afford to pay do so, and instead delivers a benefit to all students regardless of income. A better strategy to keep college affordable would be to increase the state’s need-based grant program to close the gap for students struggling to afford an education and only able to access federal grants.

Of course, it is hard to believe that keeping college affordable is the true intent.  After all, why then are just these five institutions targeted with a tuition cap? If the tuition cap is the policy choice of the Senate to achieve affordability, it should be applied to UNC Chapel Hill and NC State, too.

All UNC institutions will face a limit on fee increases. Students at all UNC institutions will be able to freeze tuition to what it was when they entered until four years later under this proposal. Such an approach fails to anticipate needs that may arise or the possibility that tax cuts will phase-in and further erode the state’s aspiration to be a first-rate public university system.

Steady erosion of state support for higher education in recent years has played a direct role in the increasing cost of college in North Carolina as colleges make up for state funding cuts on the backs of college students and their families. State funding per student at public four-year universities remains more than 15 percent below its 2008 pre-recession level –– equating to hundreds of millions of dollars in funding cuts. In response, public universities have increased tuition and fees in part to offset the funding cuts.

And while the bill allows for up to $70 million in state funding to be requested from lawmakers to replace the revenue loss from the tuition cap, it is unlikely that these funds will be sustained because of the priority given to poorly targeted tax cuts. It is also unlikely that they will be sufficient. The tuition cap means that any enrollment growth in the years ahead will result in greater revenue loss that otherwise could be generated from in-state and out-of-state students. A growing student body amid limited and constrained financial resources compromises the ability of these institutions to ensure quality education services that promote student success.

Ensuring an affordable college education for North Carolina students and families is important to North Carolina remaining an attractive place to live and do business, as well as in retaining the talented young people who will lead our state in the future. This short-sighted and limited budget proposal is not the road map to make college access and completion a reality for more North Carolinians despite the economic imperative to do so.

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