Should tuition be lowered to $1k/year at five UNC system schools?

NC State Senate Bill 873 proposes lowering tuition to $1k/year at five UNC system schools: Elizabeth City State, Fayetteville State, UNC-Pembroke, Western Carolina, and Winston-Salem State.      As reported in Friday's N&O, the UNC Faculty Assembly has criticized the proposal because it does not specify how the campuses will make up for the lost tuition revenue and because the plan would undermine the mission of four historically minority campuses.  Tuition ranges between $2800 and $3900 at these campuses.  In contrast, tuition is $6407 per year at NC State; mandatory fees move the annual cost up to $8880.

The bill's sponsor Sen. Tom Apodaca (a WCU graduate) argues that this would make college education more affordable.  However, if affordability is the main concern, this bill is the wrong way to go.  Students from all income levels would be applying to these campuses, many of whom could afford to pay much more.  Also, the bill does nothing to make tuition at the other UNC campuses more affordable.

The legislature's sudden concern with rising tuition coincides with an election year.  The Faculty Assembly report points out that legislatures over the last seven years have cut state funding per degree by $6865 while (not coincidentally) tuition per degree has increased by $6537.  Cause and effect?

Don't hold your breath expecting to see the old funding return.  Yet if the legislature is truly concerned about UNC system tuition being affordable, it should focus on increasing financial aid for low income students at all campuses.  To be innovative, the legislature could consider tying cash grants for tuition now to income-based repayments to the state later.  To be even more innovative, the repayment schedule could be lower for those who choose to live in NC (and who would be paying NC taxes).

Why tuition is rising

As Margaret Spellings takes over as the new UNC system president, I am sure that tuition in the UNC system will be getting a careful look.  Harvard economist Greg Mankiw recently did an NYT Upshot column where he noted three key factors:

1. No increases in productivity accompanied by rising costs.  Higher education remains a labor-intensive industry with limited opportunities for capital-labor substitution.  There has been some labor-labor substitution as schools use more non-tenure-track and part-time faculty.  But this has not been enough to offset rising salaries for faculty and staff.  
2. The widening gap in earnings between highly educated labor and less educated labor.  Colleges make extensive use of workers with advanced degrees and such workers are about the only ones getting ahead in today's economy.  If colleges employed more roofers and gardeners than professors, their labor costs would be holding steady or even dropping.  
3. Sticker versus actual prices.  Everyone knows the sticker price at Harvard, but no one knows the actual price paid by the average student.  Mankiw shows that list prices have risen by 70 percent over 20 years, whereas the net price (after scholarships) is up 32 percent.  

Two other factors that may be at work behind the national trend: (a) rising financial aid and loan access serves as a subsidy and pushes prices even higher and (b) declining teaching loads for tenure-track faculty.  

In the UNC system we have seen declining state support lead to tuition increases over the last eight years.   

Spellings has put a stake in the ground around expanding access to higher education.  Looking forward, I imagine the UNC system will be looking at innovative ways to deliver education in a more cost effective manner.