Public Universities: Out-Of-State Students Wanted?

Public universities are increasingly prioritizing the enrollment of out-of-state students to boost revenue. This shift is largely driven by declining state funding, which has resulted in higher tuition fees for out-of-state students, generating more income for the universities. While this trend has improved the financial situation of universities, it has also led to concerns about the negative impact on in-state students' access to higher education and the changing social and academic climate on campuses.

Out-of-state students bring more revenue to public universities

Public universities are increasingly turning to non-resident students to boost their revenues. In 47 states, public research universities increased the proportion of out-of-state undergraduate students they admitted between 2002 and 2022. In those two decades, the percentage of out-of-state undergraduate students at those universities rose steadily from a nationwide average of 18% to 28%.

The out-of-state premium is lucrative for schools that draw thousands of non-residents. Out-of-state students are charged a higher rate of tuition to compensate for the fact that they haven't contributed as much to the state's tax base. This higher rate of tuition can be more than double what in-state students are charged.

Public universities need money to operate, and the largest share of the funding comes from student tuition. The only way to boost the bottom line is to enroll more students who pay more. The state of Alabama, for example, provides just over 10% of the University of Alabama's budget. The money has to come from somewhere.

The shift towards out-of-state students has been driven by a decline in state funding for higher education. Once states said, "Hey, you can make your own money," public universities that could, said, "We are going to dramatically increase non-resident enrollment because they pay higher tuition.".

This shift has buttressed the finances of schools across the country, reshaping the profile of their student bodies. However, critics worry that in-state students are being shut out. To minimize this, some states limit the number of out-of-state students.

In-state students benefit from lower tuition fees

The difference in fees can be significant. During the 2021-2022 academic year, the average tuition at in-state, public institutions was $9,596 annually, according to the National Center for Education Statistics (NCES). Meanwhile, the average tuition at public, out-of-state schools was $27,457 per year—almost three times as much.

The gap between in-state and out-of-state fees varies across different states and schools. For example, in-state students in Vermont paid an average tuition of $17,683 at public universities for the 2021-2022 academic year, while those in Florida paid just $4,613.

The lower fees for in-state students are possible due to state subsidies provided to public universities, funded by the taxes paid by state residents. These subsidies are intended to improve access to higher education for state residents. However, critics argue that the trend of increasing out-of-state enrollment in public universities is shutting out in-state students.

Some states have implemented measures to limit the number of out-of-state students and ensure that in-state students are not crowded out. For example, Oregon State University has an informal ratio of two-thirds resident and one-third non-resident students. In North Carolina, five state schools have an 18% cap on the number of out-of-state students.

Public universities are becoming less accessible to low-income students

Funding and Policy Changes

One key factor is the reduction in state funding for public higher education, which has resulted in tuition increases, making it more difficult for low-income students to afford these institutions. This issue is exacerbated by the fact that financial aid has not kept pace with rising tuition fees, leading to a greater financial burden on low-income families.

Additionally, public universities are increasingly prioritizing revenue generation by targeting out-of-state and international students who can pay higher tuition fees. This shift in focus has led to a decrease in the number of available seats and institutional aid dollars for in-state students from less-privileged backgrounds.

Demographic Shifts

The changing demographics of undergraduate students also play a role in the decreasing accessibility for low-income students. The overall number of undergraduates has increased, with a significant rise in the number of students from low-income families and students of color. This shift is more pronounced in public two-year colleges and less selective four-year institutions. As a result, the competition for limited resources at public universities has intensified, further reducing accessibility for low-income students.

Impact on Low-Income Students

The consequences of these changes are significant. Low-income students not only face higher tuition fees but also experience a sense of isolation on campuses where the proportion of affluent students is increasing. Additionally, the shift in the student body composition can lead to changes in campus culture, making low-income students feel unwelcome or pressured to conform to more expensive social norms.

Policy Solutions

To address these issues, policymakers and university administrators need to prioritize increasing accessibility for low-income students. This may include reallocating resources, providing more financial aid, and implementing policies that promote diversity and inclusion.

In conclusion, public universities are becoming less accessible to low-income students due to a combination of funding cuts, shifting demographics, and changing institutional priorities. Addressing these challenges is crucial to ensuring that higher education remains a pathway to social mobility and equal opportunity.

Out-of-state students may face higher student loan debt

Public universities have been accepting more out-of-state students in recent years. This is because they can charge higher tuition fees to out-of-state students, which boosts their revenue. However, this trend may have a negative impact on out-of-state students' student loan debt.

Out-of-state students often face higher tuition fees than in-state students. For example, at Oregon State University, the tuition and fees for in-state students are estimated to be $13,800 for the 2023-24 academic year, while out-of-state students are charged about $36,600. This difference in tuition fees can result in higher student loan debt for out-of-state students, especially if they do not receive sufficient scholarships or financial aid.

The impact of higher tuition fees on student loan debt is evident when comparing states with higher proportions of out-of-state students. For instance, in Oregon, the average percentage of out-of-state undergraduate students increased from 23% to 47% at the state's public research universities. As a result, Oregon residents may face higher student loan debt compared to students from other states with lower out-of-state enrolment.

Additionally, the shift towards enrolling more out-of-state students can lead to a decline in the number of low-income and moderate-income students at public universities. This is because universities often prioritise revenue generation by attracting affluent out-of-state students who can pay higher tuition fees. Consequently, low-income and moderate-income students, who were once the primary beneficiaries of public universities, may now have to turn to private loans to finance their education, further increasing their student loan debt.

Furthermore, the increase in out-of-state students can alter the socioeconomic and racial composition of universities. Research by Ozan Jaquette, Bradley Curs, and Julie Posselt found that a growth in the share of out-of-state students was associated with a decline in the proportion of low-income students receiving Pell Grants. This indicates that higher tuition fees and a lack of financial aid options may disproportionately affect low-income students, potentially leading to higher student loan debt for this demographic.

While out-of-state students may face higher tuition fees and, consequently, higher student loan debt, it is important to note that other factors also contribute to student loan debt levels. These factors include the type of degree pursued, the cost of living in a particular state, and the availability of scholarships and financial aid. Additionally, the impact of out-of-state enrolment on student loan debt can vary depending on the state and the specific university's policies.

Public universities are becoming more reliant on tuition fees

Public universities in the United States are increasingly reliant on tuition fees as a source of revenue, with a growing number of students coming from out-of-state. This shift has been driven by declining state funding for higher education and the need for universities to balance their budgets. The trend is particularly noticeable among "flagship" universities, which are the top public institutions in each state.

In 47 states, public research universities have increased the proportion of out-of-state undergraduate students they admitted between 2002 and 2022. Over those two decades, the percentage of out-of-state students at these universities rose from a nationwide average of 18% to 28%. This shift is due in part to state legislatures and governors reducing funding for higher education, as well as universities' desire to boost revenue by enrolling more students who pay higher tuition fees.

The move towards out-of-state recruitment was initially led by flagship state universities, which had the widespread name recognition to attract students from other states. However, it has now trickled down to the next tier of public colleges as budgets have tightened further and more non-residents apply. Some universities focus their recruitment on private high school students, as their families are often able to afford the higher tuition fees. Additionally, some universities offer merit-based scholarships and grants to out-of-state students to attract them to their institutions.

The shift towards enrolling more out-of-state students has been controversial, with critics arguing that it shuts out in-state students and increases student debt. In response, some states have implemented quotas or laws aimed at prioritizing in-state residents. For example, in North Carolina, several state schools have an 18% cap on the number of out-of-state students they can enrol. In California, the University of California Board of Regents adopted a policy in 2017 to limit non-resident enrollment to 18% at five campuses.

Despite the controversy, it seems unlikely that this trend will reverse, as universities continue to face financial pressures and seek to maximize revenue. The reliance on tuition fees from out-of-state students may have negative consequences for social mobility, as high-achieving, low-income students may find it more difficult to gain admission to their state's flagship university. Additionally, the increasing privatization of public universities may lead to a decline in the quality of education for students who are unable to afford the higher tuition fees.

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