As I wrote in a post yesterday, it is standard practice for both public and private colleges and universities to use tuition revenue to provide financial aid. The typical challenge for public institutions is that they don't generate nearly as much revenue as private institutions, and thus don't have as much to contribute to aid. Among public institutions, the other significant challenge to ensuring affordability is convincing administrators to focus aid on financial need, rather than academic merit.
One of the strong points of Chancellor Martin's arguments for the NBP is that UW-Madison ought to be able to use tuition to support need-based aid, if it so chooses. It has chosen to do so recently, under the Madison Initiative for Undergraduates. I base that last statement on the clear upward trajectory of resources for institutional need-based aid (what she says is a 226% increase), shown in a graph provided by the director of financial aid, Susan Fischer, at a recent meeting of the University-wide Committee on Undergraduate Recruitment, Admissions, and Financial Aid-- a committee that I've chaired for three years. I hesitate on the statement just a bit, though, because the use of tuition to support need-based aid does not equate with enhanced affordability unless the approach reduced net price for students and no sticker shock occurred-- two conditions for which I've been shown no evidence.
In any case, let's say this: Martin and I agree that UW-Madison ought to be allowed to use tuition to fund need-based aid if it chooses. The question is how to make that happen. Her proposed approach is the NBP. Here's an alternative:
The Wisconsin Legislature ought to simply change the rules, freeing the Board of Regents to approve the use of tuition in this manner. Individual institutions should submit their requests for using tuition in this way to the Board.
Why this model? And is it feasible?
The Board of Regents needs to set tuition holistically, across all public universities, in order balance students' needs with institutional interests. Sadly, sometime universities act like "Cookie Monster" -- they gobble every dollar then can, and then ask for more. Since funding doesn't equate with quality education, students can get hurt.
Based on the January 2011 report on University of Wisconsin tuition, published by the Legislative Fiscal Bureau, it certainly seems that the Legislature can act to change this rule without the NBP. As author Emily Pope writes, "tuition typically supports only the "instructional" portion of the UW budget. Instructional costs include faculty salaries and fringe benefits, which comprise the largest portion of instructional costs, supplies and services, administration, libraries, student services, and support costs. Exceptions to this occurred in the 1997-99, 1999-01, and 2001-03 state budgets, when the University was allowed to use tuition revenues to support the unfunded portion of the compensation plan for faculty and academic staff, which included compensation increases for faculty and academic staff whose time was spent on activities other than instruction."
The italics are mine. If exceptions have been granted to allow tuition revenue to be used for compensation, why couldn't it be used for financial aid?
Now, I admit-- I am not an expert on these kinds of rules. I am simply hoping someone will read this and explain it to all of us.
***************
On a different but related issue:
Why is it that the NBP does not include language comparable to this language in the Board of Regents current tuition policy?
GPR financial aid and graduate assistant support should "increase at a rate no less than that of tuition" while staying "commensurate with the increased student budget needs of students attending the UW System." In addition, support should
also reflect "increases in the number of aid eligible students."
That's called tying aid to tuition...
UW-Madison's Average Family Income is $90,000?
Based on the tweets from today's student conversation with Chancellor Martin, there's a big myth running around campus:
No, the average family income of UW-Madison students isn't $90,000.
That number came from reports like these that were discontinued back in 2008. Why were they discontinued? Because the data they are based on is a train wreck. The information comes from students' self-reporting of their parents' income when they were in high school (reporting is done on the ACT questionnaire) and according to UW-Madison's office of academic planning and analysis 30% of UW-Madison students left the question blank (and that percent has been rising over time).
Is it a high estimate? A low one? Well, what we know is that a study done by two La Follette professors using Census blocks to estimate income (better than student self-report most likely) finds that family income at UW-Madison for Wisconsin residents isn't very out-of-whack with Wisconsin family incomes as a whole. For example, families of Wisconsin applicants to Madison have incomes that are 1.2 to 1.3% higher than the state average.
Why don't we have a really accurate measure of family income? Because UW-Madison doesn't ask students to report their family income on their application (for obvious reasons) nor does it require them to complete a financial aid application (otherwise known as a FAFSA). So we only know family income--according to parents--for those who apply for aid. And less than 50% of UW-Madison students apply. That doesn't mean less than 50% are needy; many needy kids don't apply every year because the application is insanely onerous and difficult to complete correctly. In fact, upper-income folks are more likely to complete it, and to do it correctly, because they're hoping to get a loan.
If we really want to promote affordability at UW-Madison we should make FAFSA completion an "opt out" rather than "opt in." This is the kind of nudge behavioral economists love, since it makes the default option less painful (people tend to resort to inaction over action).
Why aren't we doing it now? This did, after all, come up during debates over the Madison Initiative for Undergraduates and I made the proposal directly to Chancellor Martin over lunch in spring 2009.
I can think of a few possible reasons, see which one you think fits:
(1) We are worried about privacy. But remember, you can opt out.
(2) We are worried about deterring students who don't want to complete the form. But remember, we'd only require it after you applied and were accepted, and were able to enroll. Even then, you could opt out.
(3) We are worried about undocumented students. But remember, you can opt out.
(4) We are worried about the increased paperwork and staff time. But think about all of the financial aid $ our students would get at no cost to us (e.g. federal $)
(5) We are worried about our institutional aid costs. The more you identify as needy, the more you have to "hold harmless."
I'm willing to bet that requiring all entrants to complete the FAFSA or opt out would increase the percent receiving Pell by a fair bit, and increase retention rates by getting more students the financial aid they deserve. And once we have more accurate family income information for more than 90% of our population, we'll likely find out that right now our average Wisconsin family income is much lower than $90,000. Under NBP, I'm willing to bet that will change drastically because of (a) an increased perception of elitism, (b) disjuncture from the System, (c) sticker shock, and (d) insufficient discounting over time.
But of course, who am I to make such judgments? We are told, after all, we have nothing to worry about.
No, the average family income of UW-Madison students isn't $90,000.
That number came from reports like these that were discontinued back in 2008. Why were they discontinued? Because the data they are based on is a train wreck. The information comes from students' self-reporting of their parents' income when they were in high school (reporting is done on the ACT questionnaire) and according to UW-Madison's office of academic planning and analysis 30% of UW-Madison students left the question blank (and that percent has been rising over time).
Is it a high estimate? A low one? Well, what we know is that a study done by two La Follette professors using Census blocks to estimate income (better than student self-report most likely) finds that family income at UW-Madison for Wisconsin residents isn't very out-of-whack with Wisconsin family incomes as a whole. For example, families of Wisconsin applicants to Madison have incomes that are 1.2 to 1.3% higher than the state average.
Why don't we have a really accurate measure of family income? Because UW-Madison doesn't ask students to report their family income on their application (for obvious reasons) nor does it require them to complete a financial aid application (otherwise known as a FAFSA). So we only know family income--according to parents--for those who apply for aid. And less than 50% of UW-Madison students apply. That doesn't mean less than 50% are needy; many needy kids don't apply every year because the application is insanely onerous and difficult to complete correctly. In fact, upper-income folks are more likely to complete it, and to do it correctly, because they're hoping to get a loan.
If we really want to promote affordability at UW-Madison we should make FAFSA completion an "opt out" rather than "opt in." This is the kind of nudge behavioral economists love, since it makes the default option less painful (people tend to resort to inaction over action).
Why aren't we doing it now? This did, after all, come up during debates over the Madison Initiative for Undergraduates and I made the proposal directly to Chancellor Martin over lunch in spring 2009.
I can think of a few possible reasons, see which one you think fits:
(1) We are worried about privacy. But remember, you can opt out.
(2) We are worried about deterring students who don't want to complete the form. But remember, we'd only require it after you applied and were accepted, and were able to enroll. Even then, you could opt out.
(3) We are worried about undocumented students. But remember, you can opt out.
(4) We are worried about the increased paperwork and staff time. But think about all of the financial aid $ our students would get at no cost to us (e.g. federal $)
(5) We are worried about our institutional aid costs. The more you identify as needy, the more you have to "hold harmless."
I'm willing to bet that requiring all entrants to complete the FAFSA or opt out would increase the percent receiving Pell by a fair bit, and increase retention rates by getting more students the financial aid they deserve. And once we have more accurate family income information for more than 90% of our population, we'll likely find out that right now our average Wisconsin family income is much lower than $90,000. Under NBP, I'm willing to bet that will change drastically because of (a) an increased perception of elitism, (b) disjuncture from the System, (c) sticker shock, and (d) insufficient discounting over time.
But of course, who am I to make such judgments? We are told, after all, we have nothing to worry about.
The Power of the Line Item Veto
Check it out-- what the NBP looks like after Governor Walker exercises his line-item veto.
How bad is it? Here's the remaining role of the faculty: "The faculty, subject to the responsibilities and powers of the board and the chancellor, shall participate in academic and educational activities."
Period.
The students? "shall be participants in the university."
Is this the University of Wisconsin-Madison of YOUR dreams?
UPDATE: Apparently Chancellor Martin is "not worried the Governor will line item veto his own bill." Ok then, Scott Walker-- a man to be trusted. Hm....
How bad is it? Here's the remaining role of the faculty: "The faculty, subject to the responsibilities and powers of the board and the chancellor, shall participate in academic and educational activities."
Period.
The students? "shall be participants in the university."
Is this the University of Wisconsin-Madison of YOUR dreams?
UPDATE: Apparently Chancellor Martin is "not worried the Governor will line item veto his own bill." Ok then, Scott Walker-- a man to be trusted. Hm....
Trends at the University of Virginia
I've been getting a lot of questions about what's happened at other states and other institutions. Trying to balance my "regular" work with this blog is tough, but here's a bit of info to keep the conversation going.
University of Virginia
(1) The proportion of students applying for financial aid and having demonstrable need is appalling low-- just 25%--and it has declined substantially over time (it was 38% in 2002). This despite a general increase in awareness of aid, more help filling out the FAFSA, and "Access UVA." The failure of needy students to apply to expensive institutions and to apply for financial aid after they enroll is one reason why financial aid isn't nearly as effective as it could be at promoting college attainment among low-income students. Academic preparation is another, but it's not as if that's gotten so much worse over time. The big change-- the sticker price of tuition.
(2) Among students in the bottom 25% of the income distribution at UVA (avg income ~$52K), the cost of attendance (tuition, fees, room and board) eats up 40% of their annual family income. For wealthy students, it eats up only about 14%.
University of Virginia
(1) The proportion of students applying for financial aid and having demonstrable need is appalling low-- just 25%--and it has declined substantially over time (it was 38% in 2002). This despite a general increase in awareness of aid, more help filling out the FAFSA, and "Access UVA." The failure of needy students to apply to expensive institutions and to apply for financial aid after they enroll is one reason why financial aid isn't nearly as effective as it could be at promoting college attainment among low-income students. Academic preparation is another, but it's not as if that's gotten so much worse over time. The big change-- the sticker price of tuition.
(2) Among students in the bottom 25% of the income distribution at UVA (avg income ~$52K), the cost of attendance (tuition, fees, room and board) eats up 40% of their annual family income. For wealthy students, it eats up only about 14%.
Response to Students for NBP
I applaud Jon Alfuth of the Students for the New Badger Partnership for attempting to do something the UW-Madison Administration has not bothered to do -- share some models of affordability under the NBP.
Jon asked me for my critique, so here are some big picture questions to ponder while I try and secure the numbers required for an alternative model (don't hold your breath, this requires figures beyond what Jon seems to have here and I don't see a UW source willing to provide them):
(1) Why assume that tuition will increase at the same rate for resident and non-resident students? That seems very unlikely-- typically rates for nonresidents increase at twice the rate for residents (Don Hossler, 2005, "Students and Families as Revenue, p. 116).
(2) Why assume the % of non-residents remains the same? Assuming the differential in tuition grows, this will likely tip the proportion of residents downwards, since the BOT will begin to find nonresidents even more attractive. Doubt this? Job descriptions for enrollment managers at public research universities have included a preference for candidates with successful strategies to attract out-of-state students (Hossler, p. 117).
(3) A discount rate is the average institutional grant divided by average tuition and fees-- for example, a 15% discount rate would mean that for every $1,000 increase in tuition and fees UW-Madison would award a $150 institutional grant. What is the assumed discount rate for in-state and out-of-state students? At private institutions it's around 40 percent. At publics it is on average 14%. First, what is it right now at UW-Madison? We need to know. We must know to do this modeling appropriately. If we intend to raise tuition and compete with privare institutions, the discount rate will have to climb-- and thus much of that additional projected revenue won't be realized as gains at all. (Don't believe me? AASCU writes, "part of the reason why institutions are able to keep their discount rates low is due to the fact that they are able to keep their tuition rates relatively low, making the overall cost of attendance relatively low.")
(4) Discounting cannibalizes revenue. What are your calculations as to the likelihood that under a new model UW will be able to afford to devote 30+ % of new tuition revenue to aid?
(5) What is the assumed discount rate for in-state versus out-of-state students? National data indicate that non-residents are 1.7 times more likely to get a discount and that discount costs a lot. "For example, a one-percent increase to the non-resident tuition discount rate would cost an institution $100.13, while an equivalent percentage increase for resident students would only cost $35.80." Is the UW-Madison community comfortable with giving more of our institutional aid as a discount to non-Wisconsin folks?
(6) What is the assumed discount rate for low-income versus high-income students? Biddy has made a big deal about how much she has grown need-based aid under MIU, but the fact remains that UW-Madison spends much more on merit-based aid than on need-based aid. Nationally, institutions have increased the proportion of institutional aid devoted to merit-based aid faster over time. Moreover, national data indicate that while low-income students are more likely to get a discount, theirs is typically smaller than those given to high-income students. In a recent study of public universities, "students whose families earn between $70,000 and $100,000 receive an average discount of 15.1 percent, while the lowest income students only receive a 14.7 percent discount rate."
(7) Why assume the BOT and Chancellor of today keep their promises (well actually we don't even know who the BOT is) for tomorrow, the day after and the day after? What grounds do you have to disagree with all of the scholarly proponents of this approach to financing, who clearly state that the link between aid and tuition should be legislated, not left up to faith?
(8) We already use differential tuition to finance aid. Can you explain why continuing to do that during the near future wouldn't be as effective as NBP?
Big picture: Jon and I shouldn't have to do this modeling ourselves. If UW Madison wants to argue for tuition flexibility it should have produce these kinds of figures a long time ago and made them publicly available.
More to come...
Jon asked me for my critique, so here are some big picture questions to ponder while I try and secure the numbers required for an alternative model (don't hold your breath, this requires figures beyond what Jon seems to have here and I don't see a UW source willing to provide them):
(1) Why assume that tuition will increase at the same rate for resident and non-resident students? That seems very unlikely-- typically rates for nonresidents increase at twice the rate for residents (Don Hossler, 2005, "Students and Families as Revenue, p. 116).
(2) Why assume the % of non-residents remains the same? Assuming the differential in tuition grows, this will likely tip the proportion of residents downwards, since the BOT will begin to find nonresidents even more attractive. Doubt this? Job descriptions for enrollment managers at public research universities have included a preference for candidates with successful strategies to attract out-of-state students (Hossler, p. 117).
(3) A discount rate is the average institutional grant divided by average tuition and fees-- for example, a 15% discount rate would mean that for every $1,000 increase in tuition and fees UW-Madison would award a $150 institutional grant. What is the assumed discount rate for in-state and out-of-state students? At private institutions it's around 40 percent. At publics it is on average 14%. First, what is it right now at UW-Madison? We need to know. We must know to do this modeling appropriately. If we intend to raise tuition and compete with privare institutions, the discount rate will have to climb-- and thus much of that additional projected revenue won't be realized as gains at all. (Don't believe me? AASCU writes, "part of the reason why institutions are able to keep their discount rates low is due to the fact that they are able to keep their tuition rates relatively low, making the overall cost of attendance relatively low.")
(4) Discounting cannibalizes revenue. What are your calculations as to the likelihood that under a new model UW will be able to afford to devote 30+ % of new tuition revenue to aid?
(5) What is the assumed discount rate for in-state versus out-of-state students? National data indicate that non-residents are 1.7 times more likely to get a discount and that discount costs a lot. "For example, a one-percent increase to the non-resident tuition discount rate would cost an institution $100.13, while an equivalent percentage increase for resident students would only cost $35.80." Is the UW-Madison community comfortable with giving more of our institutional aid as a discount to non-Wisconsin folks?
(6) What is the assumed discount rate for low-income versus high-income students? Biddy has made a big deal about how much she has grown need-based aid under MIU, but the fact remains that UW-Madison spends much more on merit-based aid than on need-based aid. Nationally, institutions have increased the proportion of institutional aid devoted to merit-based aid faster over time. Moreover, national data indicate that while low-income students are more likely to get a discount, theirs is typically smaller than those given to high-income students. In a recent study of public universities, "students whose families earn between $70,000 and $100,000 receive an average discount of 15.1 percent, while the lowest income students only receive a 14.7 percent discount rate."
(7) Why assume the BOT and Chancellor of today keep their promises (well actually we don't even know who the BOT is) for tomorrow, the day after and the day after? What grounds do you have to disagree with all of the scholarly proponents of this approach to financing, who clearly state that the link between aid and tuition should be legislated, not left up to faith?
(8) We already use differential tuition to finance aid. Can you explain why continuing to do that during the near future wouldn't be as effective as NBP?
Big picture: Jon and I shouldn't have to do this modeling ourselves. If UW Madison wants to argue for tuition flexibility it should have produce these kinds of figures a long time ago and made them publicly available.
More to come...
A Challenge to the UW Board of Regents
While the last several months have been contentious ones, I think that the road ahead needs to include many more uncomfortable discussions. In particular, we need to have fierce conversations about two key issues that have received insufficient attention in the debate over the New Badger Partnership:
(1) The public purpose of our flagship university
(2) The way we spend our money
Much has been said by UW-Madison administration about the need to compete on a global scale, not only with American universities but with those in Shanghai. We have also heard that the best way for UW-Madison to meet the needs of Wisconsin is for it to be the most competitive it possibly can be. Furthermore, we have been told that such a goal does not exclude other objectives, including the desire to be at least modestly accessible to all of the state's residents. (Just google "Biddy" and NBP and you'll get more than a dozen examples of each of these statements. Or simply get the transcript from Tuesday's student Q&A in Bascom.)
These claims are deeply problematic.
As Gordon Davies, long-time scholar of higher education (and head of Virginia's State Council for Higher Education from 1977 to 1997) puts it, public higher education should "maximize service, not status." Colleges and universities, Davies says, need to "wake up"-- and UW-Madison is no exception. To regular readers of this blog, his advice should sound familiar. "Here's the new definition of prestige: an institution that serves the people of its state or region carefully at a price all of them can afford. Now, make that part of the definition of 'elite'."
Madison's leadership has it all wrong: public universities should not be "encouraged to emulate highly selective private universities, not because there is something wrong with highly selective private universities but because the two have different missions...In their scramble to get more applications so they can reject more applicants, to win more recognition for selected academic programs, and to 4 be among the top 30 (or even 100!) research universities, universities tend to lose sight of their importance to the regions in which they live."
Being from Virginia, Davies knows this landscape well. I listened to UW's student radio this morning as a pro-NBP student (Tyler?) tried to make the case that UW-Madison really needed the NBP because it only has one flagship--whereas places like Virginia and New York are lucky to have multiple top universities. What he didn't seem to realize is that he was undermining his own argument, for as Davies points out, in Virginia "having two institutions (UVa and William and Mary) designated as “public Ivies” a few decades ago was an honor because they were part of a balanced system of institutions within which there were places for everyone. Having many, if not most, public universities aspire to elite private institution levels of selectivity is a serious error and a sign of a reward system gone wrong." Lest you think that isn't happening in Wisconsin, just take a look at the recent statements made by the chancellors of other UW universities.
All available evidence is that our reward system has gone wrong in Wisconsin when so many public universities are acting like "wannabes" seeking to "emulate the elite and highly selective." Wisconsin higher education is not doing a good job at serving all of its citizens and it therefore cannot afford to engage in "meaningless ambition." Again, Davies: It is "wrong to assume that what is good for individual universities is good for a state...we are betting that we can compete in this global economy by educating a technological elite and ignoring the masses. China is making this bet. So is India. But they are much larger populations than ours. For the United States, and for individual states, is this an economically responsible bet? Is it a morally responsible choice?"
UW-Madison's current effort to push for a new approach to help it gain more revenue misses the boat on another important dimension as well: our financial woes are at least as attributable to how we spend our money as to how we obtain it. Or, as Jane Wellman of the Delta Cost Project once put it, “the funding problem in American higher education is as much about focus and priority as it is about revenue."
The NBP skipped several key steps in what's become a widely accepted approach to higher education reform, one promoted by national initiatives such as Making Opportunity Affordable. Before looking for ways to bring in more cash, universities first need to work with the state to (a) set goals (with regard to the above discussion in particular), (b) align spending with those goals, (c) improve degree productivity, and (d) enhance public accountability. Only after those conditions are set do they really have a case for seeking more money.
Some of the strongest evidence that UW-Madison skipped these crucial steps before pursuing the NBP lies in constant repetition of the claim that we are engaged in a "balancing act" that requires sacrificing equity in order to enhance quality. This is the classic "Iron Triangle" model known to all higher education analysts-- and it is a hopelessly outdated one. The points of the triangle are funding, access, and quality-- and the claim is that any effort to improve one area is only possible at the expense of another. Put differently, as experts at a recent University of Virginia policy conference noted, "[Colleges and universities] have long equated quality with resources, which means that spending cannot be managed without sacrificing either access or quality. Although some economic theories about the unique cost structures of the non-profit sector are consistent with these views, reality simply cannot support them. The times demand greater access and equal or greater quality despite a long, difficult recession. Furthermore, the Iron Triangle assumptions are not supported by research. Research shows a very weak relationship between spending and performance, measured not only by degree attainment but also by the level of the state population obtaining access, retention and degree production, and production of graduates who remain in-state to fill high-demand jobs. To be sure, measures of reputation - such as admissions selectivity, or proportions of faculty with terminal degrees, or spending on athletics and endowment earnings - all correlate with money. But for the most part these measures have little to do with the public priority to increase degree attainment. The Iron Triangle is a set of false assumptions that contribute to the fractured dialogue among higher education constituencies."
This is exactly what has happened at UW-Madison. Leadership has insisted on an approach that, while initially claiming to enhance both quality and equality, ultimately it admits succumbs to a balancing act that tips towards sacrificing access for quality. This is a classic response of college administrators, who find every way possible to demand more money while insisting that their decisions are caught in the Iron Triangle (see Table 1 at this link).
Our future depends on creative thinking on the part of the Board of Regents. The board needs to think long and hard about how to bring the full constituency of Wisconsin public higher education together-- and soon. Wellman and Davies both offer good advice: "States need to re-assert control over their public colleges and universities, to make them once again members of coordinated systems with clearly defined missions...For public institutions, boards need to manage this discussion rather than try to avoid it...Visible public processes need to be put in place to address how university systems or institutions will accomplish these goals, including dialogue about teaching and learning, and attention to ways that costs will be managed. Higher education leaders need to use these forums as a way to stimulate institutional learning, to put information about costs and spending into context, to educate institutional leadership, faculty, students and public policy officials about where the money comes from, where it goes, and what it buys."
The time is now. The Board of Regents must lead.
The New Badger Partnership is Not About Affordability
According to the Badger Advocates' new television ad promoting the New Badger Partnership, the number one reason this new policy is needed is "To keep tuition affordable and provide more financial aid."
This claim is echoed in speeches by Chancellor Martin and her Administration, and maintaining or enhancing affordability is a central goal for the NBP articulated by student advocates.
Can the NBP achieved its primary policy objective? Will it?
The strong likelihood is no. Here, again, is why.
(1) The value of financial aid depends on cost of attendance. The real cost of college attendance for students and families is the "net price" they pay -- that is, the cost of attendance minus financial aid. Since some students do not respond well to loans, many argue that net price is actually the difference between cost of attendance and grant aid.
(2) The New Badger Partnership makes statements about the need to "keep tuition affordable" but it says nothing about tying increases in financial aid to increases in tuition. This is one of the biggest myths going around right now-- please, look at the legislation-- there is not a word about increasing aid in proportion to tuition in there. In other words, the NBP says nothing about maintaining or reducing net price. While advocates for the NBP rightly note that some higher education analysts support a "high tuition high aid" model, they neglect the clear statements made by those analysts that in order to work -- e.g. in order to maintain or enhance affordability--increases in aid must always accompany increases in tuition. Furthermore, those same analysts insist that since states and institutions rarely behave in such a predictable, responsible manner, it's important that they be required to do so. Yet the NBP does not mandate this.
(3) The New Badger Partnership talks about keeping tuition affordable but says nothing about keeping room and board, or student fees affordable. The cost of attendance, and thus the net price, includes all of those things. And those non-tuition costs have been rising faster than tuition for a long time.
(4) Only if "net price" decreases substantially will affordability may be improved. I see nothing in the NBP that suggests that grant aid will grow much more rapidly than tuition or that such growth will always be sustained over time-- so I think the chances of a substantial decrease in "net price" and increase in affordability are slim to none.
(5) If "net price" does not change, affordability is at best maintained. That would be the true meaning of "hold harmless" (as in the Madison Initiative for Undergraduates). But again, I say "at best" maintained because it is also plausible that sticker price has an effect on student decision-making, apart from net price. In other words, some students and families may be "scared off" by the higher tuition, perhaps because they misunderstand discounting. In that case, affordability is eroded.
(6) Misunderstanding of discounting is widespread among all kinds of people, including those in the lower and middle-income brackets. It's a bigger problem among low-income people. Not a single "sticker shock" program has been proven effective-- including those at private institutions-- where research shows the percent of low-income students has not increased despite such campaigns.
Given these facts, why is the NBP being promoted as an effort to maintain or even enhance affordability? At best, this seems disingenuous. Instead, Advocates could talk about the other aims of the policy-- e.g. improving excellence and/or quality--and make the case that increases in those things offset sacrifices to affordability. But they are not making this case, and I suspect it's because they know the argument will not fly with much of their constituency. Instead they have adopted the rhetoric of affordability that appeals to liberals, and used it to paper over a campaign that is ultimately focused on the needs of the elite.
Finally, let's talk about the great fear: "the status quo."
It is true that UW-Madison has grown less affordable over time, that institutional need-based aid did not increase until Chancellor Martin's regime, and that we stand to get higher tuition even absent the NBP. All that is true, and affordability could erode as a result.
BUT THE NBP IS NOT THE ONLY POSSIBLE ALTERNATIVE TO THE STATUS QUO.
Instead of the NBP we could maintain or enhance affordability by doing the following:
(1) Require all undergraduates to complete a FAFSA before enrolling at UW–Madison, although an “opt out” option can be added for personal and philosophical reasons.
(2) Seek a change to the rules governing the use of tuition dollars. Right now we can't use them for financial aid-- instead of asking for the right to set tuition, why not instead ask for the right to use some of the dollars for aid? This is what we did with MIU-- and MIU is different from NBP in that it explicitly tied aid to tuition increases.
(3) Continue to fundraise for institutional need-based aid. The growth in fundraising for that cause under Chancellor Martin's regime came from new leadership at Foundation-- the NBP was not needed. Ask for more support in promoting that campaign.
(4) Gradually shift institutional merit-based aid to institutional need-based aid. Make it a priority-- take a stand.
(5) Lead hard conversations about cost-savings measures to reduce room and board and student fees, to reign in the cost of attendance.
(6) Collect the kind of data needed to measure the impact of institutional need-based aid (right now we do not do this, and we easily could). Document effects and use them for fundraising purposes.
(7) Experiment with a sticker shock campaign. Find a model that works for UW Madison and use it to gain the support for additional tuition increases.
(8) Rethink admissions criteria and their relationship to family income. Consider putting a "thumb on the scale" for family background in order to increase diversity at Madison.
Before you accuse me of putting forth good ideas too late in the game, know this: these are not new proposals. We have made them many times over many years. They have been ignored.
Whatever you think about it, the NBP is not about increasing affordability. It will not achieve that policy objective. Vote for it on other grounds if you must-- but do not do so thinking it will make UW Madison more affordable.
This claim is echoed in speeches by Chancellor Martin and her Administration, and maintaining or enhancing affordability is a central goal for the NBP articulated by student advocates.
Can the NBP achieved its primary policy objective? Will it?
The strong likelihood is no. Here, again, is why.
(1) The value of financial aid depends on cost of attendance. The real cost of college attendance for students and families is the "net price" they pay -- that is, the cost of attendance minus financial aid. Since some students do not respond well to loans, many argue that net price is actually the difference between cost of attendance and grant aid.
(2) The New Badger Partnership makes statements about the need to "keep tuition affordable" but it says nothing about tying increases in financial aid to increases in tuition. This is one of the biggest myths going around right now-- please, look at the legislation-- there is not a word about increasing aid in proportion to tuition in there. In other words, the NBP says nothing about maintaining or reducing net price. While advocates for the NBP rightly note that some higher education analysts support a "high tuition high aid" model, they neglect the clear statements made by those analysts that in order to work -- e.g. in order to maintain or enhance affordability--increases in aid must always accompany increases in tuition. Furthermore, those same analysts insist that since states and institutions rarely behave in such a predictable, responsible manner, it's important that they be required to do so. Yet the NBP does not mandate this.
(3) The New Badger Partnership talks about keeping tuition affordable but says nothing about keeping room and board, or student fees affordable. The cost of attendance, and thus the net price, includes all of those things. And those non-tuition costs have been rising faster than tuition for a long time.
(4) Only if "net price" decreases substantially will affordability may be improved. I see nothing in the NBP that suggests that grant aid will grow much more rapidly than tuition or that such growth will always be sustained over time-- so I think the chances of a substantial decrease in "net price" and increase in affordability are slim to none.
(5) If "net price" does not change, affordability is at best maintained. That would be the true meaning of "hold harmless" (as in the Madison Initiative for Undergraduates). But again, I say "at best" maintained because it is also plausible that sticker price has an effect on student decision-making, apart from net price. In other words, some students and families may be "scared off" by the higher tuition, perhaps because they misunderstand discounting. In that case, affordability is eroded.
(6) Misunderstanding of discounting is widespread among all kinds of people, including those in the lower and middle-income brackets. It's a bigger problem among low-income people. Not a single "sticker shock" program has been proven effective-- including those at private institutions-- where research shows the percent of low-income students has not increased despite such campaigns.
Given these facts, why is the NBP being promoted as an effort to maintain or even enhance affordability? At best, this seems disingenuous. Instead, Advocates could talk about the other aims of the policy-- e.g. improving excellence and/or quality--and make the case that increases in those things offset sacrifices to affordability. But they are not making this case, and I suspect it's because they know the argument will not fly with much of their constituency. Instead they have adopted the rhetoric of affordability that appeals to liberals, and used it to paper over a campaign that is ultimately focused on the needs of the elite.
Finally, let's talk about the great fear: "the status quo."
It is true that UW-Madison has grown less affordable over time, that institutional need-based aid did not increase until Chancellor Martin's regime, and that we stand to get higher tuition even absent the NBP. All that is true, and affordability could erode as a result.
BUT THE NBP IS NOT THE ONLY POSSIBLE ALTERNATIVE TO THE STATUS QUO.
Instead of the NBP we could maintain or enhance affordability by doing the following:
(1) Require all undergraduates to complete a FAFSA before enrolling at UW–Madison, although an “opt out” option can be added for personal and philosophical reasons.
(2) Seek a change to the rules governing the use of tuition dollars. Right now we can't use them for financial aid-- instead of asking for the right to set tuition, why not instead ask for the right to use some of the dollars for aid? This is what we did with MIU-- and MIU is different from NBP in that it explicitly tied aid to tuition increases.
(3) Continue to fundraise for institutional need-based aid. The growth in fundraising for that cause under Chancellor Martin's regime came from new leadership at Foundation-- the NBP was not needed. Ask for more support in promoting that campaign.
(4) Gradually shift institutional merit-based aid to institutional need-based aid. Make it a priority-- take a stand.
(5) Lead hard conversations about cost-savings measures to reduce room and board and student fees, to reign in the cost of attendance.
(6) Collect the kind of data needed to measure the impact of institutional need-based aid (right now we do not do this, and we easily could). Document effects and use them for fundraising purposes.
(7) Experiment with a sticker shock campaign. Find a model that works for UW Madison and use it to gain the support for additional tuition increases.
(8) Rethink admissions criteria and their relationship to family income. Consider putting a "thumb on the scale" for family background in order to increase diversity at Madison.
Before you accuse me of putting forth good ideas too late in the game, know this: these are not new proposals. We have made them many times over many years. They have been ignored.
Whatever you think about it, the NBP is not about increasing affordability. It will not achieve that policy objective. Vote for it on other grounds if you must-- but do not do so thinking it will make UW Madison more affordable.
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