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NEWS
| October 10, 2003
Tuition and Fees
Officials’ forecast contrary
to study
Administrators say tuition increases
won’t hurt UTA’s enrollment, but some findings point
to a negative relationship between cost and demand.
By Brad
Rollins
The Shorthorn managing editor
A 1994 study co-written by an economics professor here found that
enrollment at state universities falls in relation to tuition increases.
While finding the opposite was true for private institutions, the
report determined demand for public schools is “inversely
related to in-state tuition.”
The conclusions run counter to administrators’ assertions
that proposed tuition increases will not negatively impact enrollment.
Administrators have suggested a $15-per-semester-credit-hour hike
for the spring and an additional $20-per-semester-credit-hour increase
for the fall for most courses. Upper- and graduate-level engineering
and nursing courses would see additional jumps.
The study was published in 1998 but has been circulating via e-mail
among members of the Tuition Review Committee that will make a non-binding
proposal to interim President Charles Sorber this month. The UT
System Board of Regents has final authority on the increases.
The study by economics associate professor Craig Depken II and Trisha
Bezmen, a former University of Georgia professor, was based on analysis
of demand at 772 colleges and universities nationwide for the 1993-1994
academic year.
“The major report of this paper is the negative relationship
between the number of applications and the price of in-state tuition,”
the economists wrote. “This indicates that the price discriminating
behavior of public schools [in setting out-of-state tuition] may
be interpreted as a signal of a higher quality education at a particular
public school. On the other hand, as in-state tuition rates increase,
other schools become more appealing to in-state students because
of changes in relative price.”
While saying the “tuition elasticity of demand” was
not statistically significant, the study suggested that demand decreases
by nearly 2 percent in tandem with major rate hikes. Demand is defined
as a combination of full-time enrollment and new admissions applications.
Depken, who is traveling in China, could not be reached for comment.
The university could lose about 455 students based on this semester’s
24,979 enrollment, according to the formula in the study.
A decline of that scope would amount to $1.7 million per year based
on a median estimation of tuition and fees for a year. The university’s
Financial Aid office uses a $3,800 estimation for the cost of two
semesters’ tuition and fees for the 2003-2004 academic year.
Administrators say they expect the proposed tuition hike would curb
the rate of enrollment growth but don’t project a net decline
of students.
“I would anticipate perhaps some reduction in our growth in
the short term, but it would level off fairly soon,” interim
President Charles Sorber said. “I would not expect a decrease
in enrollment itself as long as we end up with a tuition rate competitive
with other schools.”
Enrollment grew by 4.9 percent over last fall, capping five years
of increases. Current enrollment is a near record high for the university,
straining faculty and facilities, which administrators cite as a
major reason for the tuition increases.
Interim Provost Dana Dunn, who made the increase proposal under
consideration, said tuition rates are increasing statewide, which
should blunt the impact of what might be expected under normal conditions.
“Very often, there are not increases at virtually every institution.
Very often, there are not large financial aid funds set aside along
with the increases,” she said. “We don’t think
our trajectory of growth is such that it will be overcome by the
increases.”
She seconded Sorber’s prediction that the proposed increase
would not impact total enrollment.
“The point I would like to make is that while I’m sure
the studies are very well-done and credible, I don’t think
they’re very productive when trying to generalize how a tuition
increase would affect enrollment,” she said.
CORRECTION
This story should not have drawn the conclusion that 455 fewer students
could enroll due to proposed tuition increases based on a 1994 study
by Craig Depken II, an associate economics professor. The number
was derived from a formula for figuring the relationship between
increased tuition and decreased demand, not admissions.
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