EUGENE, Ore. — Lindsay Luallen chose to move from Alabama to enroll at the University of Oregon five years ago because the university was able to accommodate the fact that she only had herself to rely on for financial support. She hadn’t lived at home since she was 16 years old.
At the time, she was met with support from the university and able to afford college. But since then, years of tuition increases have forced her to take minimal classes, forego internship opportunities and make tough choices about where the extra tuition money would come from.
“I look at my finances week to week, month to month and year to year,” Luallen said. “With the tuition increases, it’s just a little harder to plan because I don’t know what they’re going to do next. What am I going to have to take out of next? Am I going to have some skimp on the car payment? I don’t know.”
Since the 2009-10 school year, annual tuition costs at University of Oregon have increased by about $3,500 for in-state students and $7,380 for out-of-state students, according to UO data adjusted for inflation.
As these rising costs weigh on students’ shoulders and UO administrators plan for next year, the university is considering a tuition guarantee model that would, if moved forward, fix tuition costs for students for five years to eliminate the uncertainty and increased financial burden.
It’s a change that the university hopes will give students and families peace of mind while improving its recruiting power and retention. But those benefits also carry a significant risk for the UO’s bottom line, leaving it one less tool to manage its budget.
What’s being considered
At the Dec. 10 UO Board of Trustees meeting, Jamie Moffitt, vice president for finance and administration, gave a presentation updating the board on the university’s financial standing that included a conceptual discussion about a tuition guarantee.
The presentation provided the board members a basic structure of the tuition guarantee model so they could determine if staff should continue developing the idea along with the Tuition and Fee Advisory Board.
It did not include any dollar amounts for what the set tuition rate would be. However, it did state whatever rate was decided would be fixed for five years.
All students who enter UO in fall 2021, for example, would pay the same amount each year until graduating in 2026. Every student who entered UO that year — whether it be as a freshman or transfer student — would be part of one cohort. The rate could differ based on the cohort, though it would be locked in at that rate for each cohort for five years.
Roger Thompson, vice president for student services and enrollment management, helped present the concept to the board.
“Students will know the full expected costs of their education before they decide to come to the University of Oregon,” he said.
If students did not complete their degree within five years, the cost of their sixth year would change to match the student cohort that started the year after them.
All mandatory fees also would be protected from increases, but course-specific fees would not.
“We read the research all the time, that the second largest investment a family will make is in higher education,” Thompson said. “That assumes that they own a home. If they don’t own their own home, that is the single largest investment. This would enable us to tell families and students, ‘This is what your cost is going to be,’ as opposed to fluctuations that we might see as we move through (the years).”
Risk and reward
The concept carries benefits and risks for the university.
It would provide students and families with financial predictability as they look to budget for the expense of college, Thompson said.
Keeping tuition at a fixed rate also would protect the value of scholarships UO offers, which he said are often for set amounts and don’t account for year-to-year tuition increases.
But two major benefits Thompson sees for the UO are in recruiting new students and holding on to existing ones.
UO essentially works year-round to recruit new students from across the U.S. and other countries, because student tuition and fees is the largest revenue pool to fund operations. Enrollment at UO has been in decline each fall since 2012, its data shows.
Thompson said having guaranteed tuition would be a “game changer” for recruiting and would help students stay and finish out their degree with less financial pressure.
“It removes a major stressor in our students’ lives,” he said.
For Luallen, the financial stress from tuition hikes first came her second year.
“I started out taking 12 credits per term. I wanted to up it to 16 credits per term and realized I couldn’t pay off the registration hold between the first year and the second year as easily,” she said, which she found was because of the tuition increase.
In her fourth year, Luallen wanted to take a two-credit internship seminar to have a better chance at an internship at a local software company, but found after more increases that instead of getting money back from UO through financial aid, she actually owed $2,000, so she couldn’t take the seminar.
She got to one of the last rounds for the internships but didn’t get it. It was competitive to begin with, she said, but also believes it would have improved her chances if she could have taken the seminar.
The increases also have impacted Luallen in being able to provide basic needs for herself and her companion animal, Dargie. Because Dargie is older, she requires multiple vet visits a year, which cost $60 each. If tuition were to go up even 2 percent, it could mean foregoing a vet visit.
“That’s usually the first thing that has to go when I’m thinking of priorities,” she said. “I have to think of rent and shelter — that has to stay stable. I have to pay my power and water bill. I have to have internet because I’m a student, and I can’t be on campus 24 hours a day.”
Laullen said she’ll never skimp on food for Dargie, so if she can’t pay her bills it may mean paying for food first.
“If I had a tuition guarantee for five years, that would have been nothing short of amazing in my situation,” she said. “I really do feel like it would give (students) more opportunity.”
It would give some relief to students like Luallen, but the model also could pose some issues for UO should the state decide to disinvest in higher education or if enrollment continues to decline.
“In the short term, it would take us more time to come out of a challenging budget situation,” said Moffitt, because the university would not be able to use tuition increases as a part of a budget solution.
“In an ideal world, if we move to a program like this, we would want to have some reserves built up so that when we hit that situation — if and when we hit a state recession — that we are able to recover,” she said.
It would require UO to build up a solid reserve, which could come from one last increase to tuition before setting the rates and using that extra amount to set aside for that reserve.
But the risk is worth it for students like Luallen.
“I don’t see where it could hurt the students and I really think they need to be thinking more about what is good for the students because it seems like we’ve leveled off on what’s good for everybody else,” she said. “I think we need to bring more of the focus back to just helping students make it through college.”
Some schools that currently have a program include the University of Arizona, the University of Colorado at Boulder and Ohio State University.
The Illinois state university system was the first to really explore the option in 2004, according to Jim Pinkard, director of the office of post-secondary finance and capital in the Higher Education Coordinating Commission. It also was attempted in Texas.
Many systems have failed, largely because they were attempted during the Great Recession or didn’t account for state investment.
In Oregon, tuition guarantee models have seen limited success.
The latest case in Oregon was at Western Oregon University. In 2010, WOU started a four-year tuition guarantee for in-state students, said David McDonald, WOU’s associate vice president for public affairs and strategic initiatives.
When WOU first put the “tuition promise” in place in 2010, the state was experiencing “significant disinvestment in higher education,” McDonald said. As a result, universities were increasing tuition every year between 7 percent and 12 percent. So, at that time, the change made sense.
In 2014, the school changed that set tuition rate from mandatory for students to an opt-in program. Students could decide at the start of their WOU college career to sign up for the locked tuition rate, understanding the cost was about 15 percent higher than the traditional plan, but would protect them in case of massive tuition increases.
But the program only worked in theory.
UO will be seeking input from the community and a recommendation from the tuition and fees advisory board as it continues to explore what its right-balanced model could look like. That community input piece is anticipated to come in February, and President Michael Schill will make his final recommendation to the Board of Trustees in early March, according to board documents.