As state leaders look for ways to address what threaten to be cataclysmic cuts to higher education funding in Louisiana, one idea that has been discussed is whether colleges could charge higher fees for more in-demand majors.
In practice, the idea is simple: Engineering majors, for example, would ultimately pay more for their degrees than English majors.
Supporters of the proposal say engineering courses are more costly to offer because those professors are paid more and they often rely on expensive lab equipment. Also, engineering majors are more likely to get higher-paying jobs quickly upon graduation, so those degrees are more valuable in the marketplace.
“There’s a definite internal subsidy in institutions: Everyone pays the same, but some majors cost more,” Board of Regents member Joe Wiley said. “If we can separate that out, then you pay for what you get and pay for what it costs.”
The idea isn’t new, and it’s not entirely uncommon. From Texas to Virginia, leaders have looked at “differential pricing,” as it’s called in academic circles, to help address budget issues.
A 2011 survey conducted by the Cornell Higher Education Research Institute found that the popularity of setting different tuition rates — or, in this case, charging additional fees — for different college programs has been on a steep incline since the late 1990s. According to that survey, about 21 percent of the four-year institutions surveyed had some form of differential tuition based on a student’s major. The survey also found business, engineering and nursing were the majors most likely to have higher price tags.
The Jindal administration will reveal Friday its budget recommendations for the fiscal year that starts July 1, including ways that the state can cut costs or tap into other funding resources. Early estimates are that nearly $400 million will come out of the higher education budget. That has left leaders looking for creative ways to address the deep cuts they face.
The Jindal budget plan is expected to count on implementation of the differential tuition model, allowing universities to charge higher fees for certain fields that are seen as being more in-demand. Those fields include business and engineering, areas in which the state needs more graduates.
Schools are limited on how much they can increase tuition, and, overall, tuition has risen steeply in Louisiana over the past five years. For example, tuition and fees were about $5,000 at LSU during the 2008 school year. This year, it costs about $8,700.
University of Louisiana System President Sandra Woodley said differential pricing is just one small piece of a large, complicated puzzle that higher education leaders have spent recent weeks trying to figure out.
“There’s not very much money that can be gained from those fees,” she said. “It’s important, but it’s really a small piece.”
However, many higher education experts disagree with the policy entirely, warning that its implementation could have unintended consequences and even a chilling effect on the majors that students choose — and that it might not even translate into more money.
Kevin Stange, a public policy professor at the University of Michigan, studied the effects of differential pricing in 2013. In a article outlining his key findings in the Journal of Policy Analysis and Management, Stange says differential tuition models may discourage students from studying majors with higher price tags.
“My results suggest that implementing these differentials may indeed impact the fields that students pursue,” Stange writes. “Furthermore, since differentials may reduce demand, these policies may not raise as much revenue as expected.”
A Florida task force in 2012 actually recommended the opposite — incentivizing students to go into more in-demand fields by offering lower tuition rates for those programs and charging more for degrees that are seen as not as in-demand. Under that proposal, which also came in the wake of deep budget cuts, a student would pay less for an engineering degree — a degree that costs more for schools to offer and that has a higher demand once students graduate — than a philosophy degree.
William Tierney, co-director of the Pullias Center for Higher Education at the University of Southern California and an expert on higher education policy, said the idea of charging more for fields that are seen as being more in demand typically comes into play during times of financial crisis. Often when it’s implemented, “all hell breaks loose,” he said. “The devil is in the details,” Tierney said. “Who can afford to pay more?”
“The more expensive it gets, the harder it is for poor people to figure out what kind of programs, what kind of institutions they should go to,” he said. “If we need more people in certain fields, you have to be thinking about, ‘What are we going to do to get more people studying these areas?’ You don’t make things more confusing.”
Online college guides even offer tips for students and parents to use when weighing differential tuition, advising careful consideration of the additional costs and suggesting that students may want to go for a less expensive degree if they can’t afford a more expensive major or don’t think it will be worth it in the long run.
Woodley said any proposal to charge more for certain majors would have to be accompanied by money to help students who otherwise couldn’t afford the difference. She said she doesn’t want to see a situation where only wealthy students get to major in a field like computer science.
“It would have to be met with flexibility, so that we don’t hurt the prospects of students who have financial barriers,” she said.
Tierney said even a program to help address financial inequality might not solve the issue entirely and would address problems only for students with a certain degree of financial literacy and savvy.
“If you’re going to make a policy, even if the money is available, you’re still going to see a bias toward people who can afford paying,” he said. “That is the worry.”
Follow Elizabeth Crisp on Twitter, @elizabethcrisp.
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