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Undergraduates in the University of Minnesota's business school would pay more than their classmates under a new proposal that would bring a major change to the U's egalitarian tuition model.
The Carlson School of Management is asking regents for permission to charge its students an extra $2,000 a year, phased in over the next four years, to fund new faculty hires and for scholarships to soften the increases for needy students.
While it would be a big change for the U, the proposal follows the lead of a growing number of schools nationwide charging more for certain majors as a way to deal with economic pressures, including sliding state funding.
New U President Eric Kaler has argued that because all other public Big Ten schools have differential tuition, "that does, in a financial sense, limit our ability to compete in those fields."
Right now, U undergraduates -- from English to engineering -- are charged the same tuition, plus or minus a few hundred dollars in fees. A tuition surcharge would represent a fundamental switch in philosophy.
"I really wish there was a way around it," said Lizzy Shay, undergraduate student body president and a Carlson student. "If the U is going to get a handle on its financial situation, steps like this one are necessary, and in the context of preserving the quality of Carlson instruction, I support that.
"However, increasing the tuition ... could restrict the access lower-income students will have to the college," she added.
A committee of regents will review the proposal next week, with a decision to follow this spring. If the proposal passes, it would open the door to other U colleges requesting a similar surcharge. So far, no other dean has proposed one, Provost Thomas Sullivan said.
Keeping up quality
Carlson charges Minnesota resident undergraduates $12,810 in tuition and fees. (That figure does not include other costs, such as room and board.) The college has proposed a tuition surcharge of $500 for the next school year, increasing gradually to $2,000 for the 2015-16 school year. By that point, the surcharge would generate $4.9 million in recurring revenue.
That money would be used for just two purposes, Sullivan said -- hiring faculty and providing scholarships.
"Any increase in tuition and fees must not negatively affect the ability of students to choose business as a major for financial reasons," the proposal says, "although business majors overall reap significant private benefits by way of paid summer internships, high-paying jobs and lower debt loads."
More faculty members are needed to respond to rising enrollment, Sullivan said. While the number of Carlson undergraduates has grown 20 percent over the past eight years, the faculty ranks have remained static.
"We increased the student enrollment, and the plan was to also increase the faculty to support those students," Sullivan said. "Just at the time that was happening, the budget cuts started."
In 2006-07, state money constituted about 17.6 percent of Carlson's operating budget. This year, it accounts for just 3.6 percent.
"If we let these substantial cuts continue without another strategy, quality will be affected, and the value of that degree will suffer," Sullivan said.
Easier to sell?
About 42 percent of public doctoral universities charged differential undergraduate tuition in 2010-11, according to a study to be published next year. Author Ronald Ehrenberg said the three most common degrees for which students pay extra are business, engineering and nursing.
Ehrenberg, director of the Cornell Higher Education Research Institute, suspects that some universities, facing limited state support, might charge more in colleges with the greatest demand.
"If I'm a university administrator, I am going to consider reducing my state allocation to them and raising tuition if we could," he said. "That's easier to sell publicly than raising tuition for everybody."
He acknowledges that some schools -- including business -- are more expensive to run, but worries that higher prices might push low-income students away from those majors. "Students should be free to choose what they want to study based on their intellectual interest," he said.
U leaders want to prevent that by using a portion of the increased revenue from the surcharge to feed scholarships. They also argue that Carlson's tuition is "significantly below what many of our peers charge," the proposal says. For example, Penn State charges its in-state business students tuition and fees of $18,182, more than $5,000 more than what the U charges.
When the University of Wisconsin, Madison, proposed charging engineering students extra, it promised that students would see the difference: more class sections, renovated labs, a new tutoring program. The proposal to charge engineering students an additional $1,400 in tuition passed in 2008. Business undergrads pay $1,000 a year more.
David Sabel, a first-year Carlson student, said that while college "already costs a lot of money," he would consider backing the extra charge if he knew exactly what it paid for.
"If it was used for teachers, who you can physically see, or a project being built, I feel like it would be easier to get support for that," said Sabel, who plans to major in accounting and finance, "rather than going into this general fund that you don't really know much about to begin with."
Decision in spring
Regent committees will review the proposal at meetings next week and in February. The full board could vote on it in March.
Kaler is recommending that the board change a regents policy to allow the tuition surcharge. If it passes, it would make it easier for other U colleges to get similar approvals. The regents would still review such charges, but would consider them as part of the overall budget in the spring.
The U is accustomed to charging differential tuition for its professional programs, Regent Patricia Simmons pointed out at a past meeting. For example, medical school is expensive because of the cost of instruction and the expected incomes of graduates.
"To what extent would differential tuition [at the undergraduate level] be based on the cost of delivering the educational product, the demand for the programs and the anticipated income of the graduates?" she asked, referring to a board policy on tuition.
"I would argue that all three of those elements be factored in," Kaler answered.
Jenna Ross • 612-673-7168