Trustees to roll dice with guaranteed tuition plan

From President Schill:

University of Oregon community members,

I have received recommendations from the students, faculty, and staff who comprise the Tuition and Fee Advisory Board (TFAB) and am now ready to receive campus input on an innovative guaranteed tuition model for undergraduates that deserves serious consideration. This tuition plan is a change from past practices, and I encourage the campus community to look closely at the new tuition model proposed by TFAB. I am strongly inclined to support the guaranteed tuition concept because it addresses a persistent challenge within higher education and provides real benefits to both current and future University of Oregon students.

I am asking the campus to offer feedback on the details of this plan so that I can make an informed and thoughtful recommendation to the UO Board of Trustees, which will set tuition rates at its regular meeting on March 17. I will be hosting a student forum on the plan this Monday, February 24, at 6:00 p.m. in the EMU Ballroom. Pizza, salad, and refreshments will be provided. If you cannot make the forum, please take time to leave electronic feedback on this form by 5:00 p.m., Friday, February 28.

A tremendous amount of uncertainty is built into our current tuition-setting model and this new approach is about eliminating that uncertainty for students and families so that they can more easily navigate planning and paying for college. It is a noteworthy departure from the traditional system that has been around for decades. Every year at the UO we go through the same process—we analyze how much university operating expenses will increase, determine how much will be covered by state appropriations, and come up with a tuition rate that will generate enough revenue to cover all or most of the difference. Annual tuition jumps have ranged from nearly 20 percent in conjunction with state budget cuts during the height of the recession to under 3 percent in years when state funding has been more abundant. The one constant has been that tuition always goes up—an average of 5.4 percent annually for residents over the last decade, 4.4 percent for nonresidents during that same period. We have an opportunity now to end that cycle of tuition uncertainty for students who enroll at the UO.

The guaranteed tuition model recommended by TFAB locks in a tuition rate for incoming students that they can count on for five years. No increases. No surprises. Students will know the cost of their education at the UO—one guaranteed price for tuition and all administratively controlled fees that does not change from the time a student enrolls to the time they walk across the stage at commencement (assuming they graduate in five years or fewer). Higher education is one of the most important investments many people make in their lifetime, and this eliminates the guesswork of predicting how much tuition will cost. It is a model used at peer institutions such as the University of Colorado Boulder and the University of Arizona. In fact, the ten-campus University of California System is also considering a similar proposal.

Here’s how it would work at the UO under this proposal. For the first year of the new program, TFAB is recommending a tuition increase of 10.75 percent for new resident undergraduate students and 7.5 percent increase for new nonresident students. After the rate is set for that cohort of students, tuition would not go up for five years—the per-credit-hour rate would be locked, frozen for half a decade. We would also lock all fees for the EMU, recreation center, health services, buildings, technology support, and international student fees (if applicable), as well as differential tuition for the Clark Honors College and Lundquist College of Business. The only fee not included in the model would be the incidental fee set by the student government. If this model is approved by our Board of Trustees, we would set a tuition rate for the incoming class each year and make the same five-year guaranteed tuition promise to every cohort of new students that enters the UO. We expect the increase for future cohorts to be similar to past annual increases, under 5 percent.

Transfer students would also benefit from the program, paying the same tuition rate as the freshman cohort in the year they enroll and that rate would be locked for the same five-year period. What about students who take longer to graduate than five years? In the sixth year, those students would pay the tuition rate of the class immediately behind them. If they were to take seven years, the rate would bump up to the class immediately behind that, and so on if it were to take longer. Students who are called away from school to serve active duty in the military would receive an exemption on their five-year guarantee window, meaning that they could return to the UO under the guaranteed tuition program the year after they end their military service.

Additionally, this would have no impact on the PathwayOregon scholarship program, which pays 100 percent of tuition and fees for qualifying Federal Pell Grant-eligible Oregonians. For students who receive other scholarships and grants, the guaranteed tuition plan would benefit them because the real value of their financial aid packages would stay consistent during their enrollment instead of diminishing every year in the face of tuition increases.

What about current students? TFAB has recommended that we provide a higher level of assurance and confidence around tuition rates for our continuing classes. For current students, both resident and nonresident undergraduates, the advisory board has recommended that we lock tuition increases at 3 percent per year for the next four years. I am comfortable with this proposal given that such increases are much lower annually than what students at the UO have seen on average over the last decade.

I want to be clear that this program is not without risk. The difference is that, in the past, students and families bore the brunt of that risk, particularly as it related to the strong correlation between state funding and in-state tuition. Under this new plan, the risk would shift to the institution, which must manage financial resources to account for year-over-year fluctuations in state support, potentially dramatic swings if, for instance, the state or nation were to experience a recession. For that reason, we are building a reserve of $20 million, mostly funded through philanthropy, which will be dedicated to hedging against potential state budget fluctuations and ensuring that we can continue the guaranteed tuition program for generations of future students.

I want to thank the entire TFAB for its hard work and dedication. This innovative new idea is the product of nearly a dozen open meetings and hours and hours of analysis and work by a group of volunteer students, faculty, and staff who care deeply about the UO and our ability to deliver quality, affordability, and accessibility. Please take time to review the TFAB recommendations and find out more about the proposal on a frequently asked questions page. That page also has information about the TFAB’s recommendations on graduate tuition rates and fee levels.

I look forward to hearing your feedback and insights.

Thank you.

Michael H. Schill, President and Professor of Law