Why Care About In-State Undergraduates?

Early this year, the University of Illinois froze its base-rate in-state tuition for the fourth consecutive year in an effort to keep local high schoolers from leaving Illinois for college. The in-state undergraduate population has grown 5.2 percent system-wide since the freeze was implemented, but why, exactly, should U of I and other Illinois public universities be so concerned with attracting local high schoolers? Are the benefits worth sacrificing funding to keep tuition low?

The short answer is: it’s complicated.

On a longer timescale, keeping these residents in-state for college has a measurable positive impact on both the state’s economy and government revenue. Regardless of where they earn their collegiate degrees, most Illinois residents end up beginning their careers in their home state. The difference between students studying in-state versus out-of-state, however, is significant: about one-third of out-of-state graduates don’t return to Illinois for work, whereas over 90 percent of in-state Illinoisans find their first job, and often second and third, in their home state. If those students who left the state had remained in Illinois for college, they would have collectively earned $10.1 million in wages three years after graduating. In addition to spending this money in the local economy, they would also pay taxes on it to a state in dire need of revenue.

But to reap these long term benefits, the U of I system is sacrificing revenue upfront. Assuming a stable undergraduate population, just to keep up with Midwestern price inflation over the past year, the system would have had to increase tuition 1.8 percent. This translates to over $200 per student at the Urbana-Champaign campus, and, more importantly, approximately $4.4 million in missed funding across its entire in-state undergraduate population.

To help alleviate the financial stresses caused by freezing in-state tuition, the U of I system has goals of increasing enrollment by 15 percent by 2021. Increasing enrollment that drastically across the board, while still retaining a focus on in-state students, would go a long way towards mitigating the system’s budget issues, but such a task is daunting and will most likely require more than a tuition freeze.

Eric Lichtenberger, current deputy director of information management and research at the Illinois Board of Higher Education, believes that Illinois public universities have a lot to gain from marketing their affordability. Based on a study he co-authored for the Board, he found that the most common reason Illinois residents left the state for college is that they believed remaining would be more expensive, even if this wasn’t necessarily the case. Lowering the price of in-state options—as the U of I system’s tuition freeze has accomplished—while also effectively advertising affordability are both crucial to eliminating this perception of high-costs and attracting local high schoolers.

By focusing on attracting more in-state students, the U of I system also hopes to move away from recent higher educational controversy.

The U of I system would also like to attract more in-state students in part to reaffirm its commitment to serving the people of Illinois—and to move away from recent higher educational controversy. In 2016, the University of California (UC) system drew heat for finding a different approach to dealing with funding cuts. According to a state audit released in March of that year, the system gave favorable admissions treatment to thousands of high-paying out-of-state and foreign students to maintain revenue standards.

This whole situation stems from significantly reduced financial support from the state government. In 2002, the University of California system relied on state money for nearly a quarter of its total funds. Now, however, that figure is 9 percent. Such a steep drop in less than twenty years forced the UC system to make tough decisions regarding their finances. None of the possible options, from cutting programs to steeply increasing tuition across the board, were desirable.

With this in mind, what could happen if the U of I system struggles to meet its lofty enrollment goals? When the system faced severe funding deficits during the 2015 state budget crisis, it was forced to delay larger projects for the sake of maintaining campus operations. Both building improvements and much-needed upgrades to U of I at Urbana Champaign’s (UIUC) information technology operating system were put on hold. The school also had to freeze hiring in its administration department. These issues are more inconveniences than crises, but small problems can go a long way towards damaging a university’s reputation. World-class institutions like UIUC should have functional buildings and a reliable email service, not only for their respect as a premier center of learning, but, practically, to attract the best faculty and students they can. Without check, challenges like these may only compound the U of I system’s current enrollment struggles.

Such short-term funding gaps will hopefully pass without much lasting damage to the U of I system, but continued revenue shortcomings pose a deeper threat to the institution. At pioneering research schools like UIUC, sustained economic struggle at the undergraduate level may ultimately have negative repercussions for graduate programs. Without a robust endowment (compared to many leading private universities) to sustain expensive research procedures in the face of decreased funding, UIUC may have to cut some such ventures to stay afloat. This in turn would make the university less attractive to prospective graduate students and would only add to Illinois’s economic woes.

Over 20 percent of graduate students who worked on sponsored research at several similar Big Ten universities ended up settling in the state where they attended school, according to the studies of Ohio State economist Bruce Weinberg. While this doesn’t seem like a huge number, graduates from these programs can find jobs pretty much anywhere in the country, and Midwestern states like Illinois and Wisconsin typically can’t expect a great influx of such educated workers from other places. These grad students are a step up from the in-state undergraduates because they wind up with higher salaries, and so pay more taxes. They also often start their own businesses, which create jobs for themselves and other Illinoisans. If the U of I system fails to boost undergraduate enrollment to economically sustainable levels, it, and the state, could also feel the repercussions higher up the educational ladder.

As in California, recent budget cuts for Illinois’s public colleges and universities are mostly responsible for their strained financial situation. While increased funding from the state would go a long way towards keeping these schools both affordable and fiscally secure, for the moment, they must find a way to deal with such newfound monetary challenges on their own. On the one hand, the U of I system’s push to attract more in-state students will almost definitely yield economic dividends for the state in years to come. But now more than ever, the system must also look after itself financially. Freezing tuition is not a sustainable way of attracting local high schoolers. Hopefully expanded marketing of its affordability will increase the undergraduate population to a healthy level, but, if not, the U of I system risks doing its current students a disservice and damaging its reputation for years to come.

The featured image is courtesy of Killivalavan Solai, and licensed under Creative Commons 4.0. The original can be found here.