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Challenging Questions
New ways of thinking about tuition policy


By Lee R. Kerschner

RAISE IT!" "Lower it!" "Freeze it!" These have been the competing tuition mantras of higher education trustees, students, faculty and their legislative friends. In an effort to encourage new and aggressive thinking about tuition policy, the Minnesota State Colleges and Universities system recently sponsored a conference that produced both basic principles for tuition setting, and some radical proposals for change.

The conferees agreed on 19 basic principles, the top seven of which were quite modest in breaking new ground:

Pricing should always require state (financial) commitment
Pricing strategies should meet specific institutional and system goals
These strategies should also meet specific societal goals
Pricing should be market driven
Pricing strategies should assure access
Pricing strategies should engage businesses
Tuition should be predictable over time
These principles, and 12 others that emerged from the process, have yet to be considered by the Board of Trustees of the Minnesota State Colleges and Universities, but I am hopeful that some will have an impact on the tuition-setting process. In planning discussions for the conference, and at the meetings themselves, other intriguing ideas were suggested by Chester Finn, who was the conference keynote speaker, and others. in this paper I wish to focus on some of these ideas.

I start from the premise that higher education is one of the last of society's institutions to undergo fundamental reform. The other is corrections. Health care, welfare, military and industry all have been radically reorganized. Higher education is simply naive to think it is immune.

Health also has public and private hospitals and medicine, both secular and religious. Think of professors as doctors, staff as nurses, students as patients. Why shouldn't we have higher education HMOs or PPOs, perhaps even keeping some "fee for service" options? Why shouldn't students prepay monthly lifelong learning fees at the higher education HMO or PPO of their choice? Why couldn't employers pay for such learning as part of a cafeteria approach to benefits?

The airline industry also has undergone a massive reorganization. "Yield management" has resulted in widely different prices for the same flight, depending on the time of day, season of year, Saturday night stay-over, advance purchase or customer commitment to a specific airline ("frequent flyer" plans).

Refund policies and "charge fees" are part of the process. This is all based on the logic that any revenue for a seat is better than an empty seat. Why cannot higher education price according to early sign-up, time courses are offered, space available, demand for courses and convenience to the customer (student), perhaps with similar refund policies and course change fees?

If welfare recipients are required to work, why not tie higher education support to on-campus employment for all students? (This is not a new idea.) What other ideas could we borrow from the welfare restructuring process? Could we limit the total number of units that are taken with state support? For example, state subsidies plus tuition might pay for the equivalent of five undergraduate years but all subsequent credits would be priced at full cost.

Loan forgiveness is already part of strategies to influence behavior-to produce more teachers or doctors for rural areas. Why not reward performance or provide loan rebates based on academic success?

Why not use tuition as a tool to redirect students? In its simplest form, high-demand institutions would raise tuition, while those with empty classroom seats would lower the price to attract enrollment-sort of the reverse of airline pricing but still based on yield management. This would be applied to all students without regard to the time they sign up or to the majors they choose.

Why not permit individual institutions (not systems) to utilize tuition as a tool for internal redirection, yield management or development of a particular curriculum? Some campuses and systems already are discussing this idea.

Why not use tuition to meet a state's economic goals? Lower tuition where manpower supply is low and raise it to reduce manpower in areas of surplus?

Why not let institutions use market demand to set prices? The market will sort out which institutions and/or programs survive.

Why not "de-construct" college costs? For example, put the student union, health service, student government, athletic tickets, intramural athletics and counseling services on a "fee for service" basis. Thus, students would pay only for those non-instructional services they want. They also could be charged for courses, either credit or non-credit, with, as noted above, different prices for different courses, depending on demand or yield management.

Can we capitalize individual students so that investors with risk capital could bet on individual future performance? Should there be a market in "educational futures" based on individuals or classes of individuals?

There could be "niche" pricing-for instance, a state department of corrections might subsidize criminal justice majors, or a state education department could pay tuition for elementary and secondary school teacher candidates.

Should a university out-source all of its non-core instructional programs, such as remediation, English as a second language, foreign language skills (but not literature or poetry) as a means of reducing tuition?

Should colleges and universities convert to a trimester system so that students can graduate in two and two-thirds years, with a tuition bonus, if they choose to do so?

Should students be provided with educational choices such as a basic package at X tuition level, an enhanced package at X plus Y level, or a super package for X plus Y plus Z?

Should institutions market blocks of tuition tickets for business to use with employees, employee families or preferred customers as perks? For example, should preferred customers get tuition credits instead of "frequent flyer" miles or other rewards?

Should business be charged for narrow vocational training that directly benefits them? Or, to raise the question differently, should all vocational training be contract-based?

Should the state convert college and university budgets to a voucher system and rely on a competitive market to determine the level of additional dollars needed? Such a voucher could have a lifetime limit-perhaps $25,000-and would function like a debit card.

I am not advocating any of these ideas or principles, many of which are not new. I am advocating a national debate or brainstorming session that would push the edges of the current discussion beyond "Raise it!" "Lower it!" or "Freeze it!"


Lee R. Kerschner, vice chancellor (emeritus) of the California State University, also is former executive vice chancellor of the Minnesota State Colleges and Universities. The ideas in this article are the author's own and do not represent those of either system, or of the conferees.

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