Without state funding, UC left with no good options

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The UC system is in a financial quandary.

For years, the state’s per-student funding has fallen. That’s forced the university to pick its choice of three unique pills, each saddled with its share of negative side effects: slash the budget, raise tuition or find money elsewhere.

The university has avoided significantly cutting down its overall cost. Sacrificing the quality of the top public university in the world is not a pill anyone wants to swallow, and it surely isn’t one the UC system wants to purchase.

The last has been tried to near exhaustion. With alumni-giving, patent-selling, football-stadium-building and most of all, out-of-state-recruiting, there’s only so much money left to be juiced, especially with the new cap on out-of-state enrollment.

That leaves one real choice left — tuition increases. The UC Board of Regents is set to vote on a second consecutive tuition increase this year, and of course nobody’s happy about that.

Relative to past hikes, this increase will be modest at about 2.5 percent, equal to about $385 when you also include the 5 percent increase in the student services fee. The Regents — of which I am a part — will make abundantly clear, however, that most students won’t actually be affected by this hike. That’s because their financial aid package will rise enough to cover the additional increase.

Given the state of public funding and the options the UC has, a tuition increase like this doesn’t actually seem so horrible. Not only is it expected to mostly impact students coming from families with incomes amounting to more than $165,000, but for students coming from families making less than $100,000, financial aid packages would likely increase beyond the amount of the hike. You read that right: for nearly 100,000 UC students, this tuition hike would actually be a tuition decrease.

Compare that to the only real immediate alternative — drastic cost cutting measures that could affect the quality of our education in severe ways — and I would bet that most would actually choose the modest tuition increase.

But alas, the choice isn’t so simple. While it’s true that this increase likely wouldn’t negatively impact a majority of students, raising tuition, no matter who it affects, has several side effects that are often left unconsidered. Increasing tuition, then making up for the raise with higher financial aid, is a move in the direction of what’s known as the “high-fee, high-aid” model, which has become more and more common at public universities across the United States.

Here’s why a tuition increase of any kind — the “high-fee, high-aid” kind included — is problematic.

First, there’s the simple fact that many students won’t be covered by increased financial aid and still won’t be able to afford the increase. That’s true for many middle-class families whose incomes are too high to receive much aid but whose financial obligations are too high to pay for school. It’s also true for the many students who, for some reason, are not covered by financial aid even though they are all the more deserving.

At the UC Regents meeting just last week we heard public comment from a student who is an unaccompanied minor — his parents were deported years ago and are unable to provide financial support for his education — yet he receives little to no aid. For all these students, a $348 increase can mean thousands of dollars in additional compounded student loans to pay off later in life.

Second, there’s the “sticker shock effect.” Financial aid is complicated, and no matter how much the UC and the state try to make the “true cost of attendance” clear to prospective students, most people will judge their decision to enroll and pay for school on the sticker price – that is, the full tuition and fee package, even if there’s no way they would ever pay this full amount. That could mean fewer low-income high school students applying to the UC because the price seems too high.

Third, there’s what I’ll call the “state perception effect.” If we want the state to properly fund us, they need to know that we absolutely need the money. And if we tell them that we need money or we’ll raise tuition, but only for the wealthiest students, have we undermined our own threat? It’s possible that raising tuition because of a lack of state funding may actually contribute to an even greater lack of funding.

Fourth, there’s the risk factor. What if financial aid is cut? With today’s federal government, it wouldn’t be crazy to see cuts to Pell grants. What would happen then? Would low income students be left to pay the full cost of any tuition increases if the UC couldn’t make up the difference?

For these reasons and more, the university in 2006 pledged to stay away from the “high-fee, high-aid” model.

So there you have it — a financial dilemma. Tuition hikes have been self-selected as the medicine of choice: though most students won’t feel their effects, it’s not an option without serious consequences.

At the end of the day, our long term focus needs to be on state funding. Without it, we’re never getting out of this trap.

In the meantime, it’s on all of us in the UC community to be discussing and problem-solving what short term solutions can look like.

I hope that this year we can have a more robust conversation around tuition, state funding, and our current financial situation. We’ve got to understand the full implications of our actions before we take them. I put it upon the Board of Regents — myself included — to have those conversations this year, and I hope that students, faculty, and staff can do the same.

Rafi Sands is a student advisor for the University of California Board of Regents.