On professional school tuition, UW needs freedom to compete on price

Imagine you’re shopping for a car, groceries, clothing, or almost any consumer product. Price matters … but so does quality. In fact, survey research indicates you may be turned off by prices that are too low because you may suspect something is wrong with the product.

The same phenomenon can apply to college tuition rates.

An emerging dilemma at the UW-Madison involves state government’s two-year ban on raising tuition, not only for in-state undergraduates but also for out-of-state students of all descriptions as well as professional school students in fields such as medicine, veterinary science, business, and pharmacy.

The tuition freeze for in-state undergraduates may make sense from a policy perspective: Wisconsin needs more “brain workers” and high tuition is a barrier for many students. The freeze is out of whack with market realities, however, when it comes to out-of-state students who are willing and able to pay more and professional school students who already pay some of the nation’s lowest prices.

Veterinary students from Illinois, Michigan, Ohio, or Minnesota can pay less to attend Wisconsin’s School of Veterinary Medicine at nonresident rates ($25,899 in 2013-14) than they would pay in resident tuition in their home states. Wisconsin’s nonresident tuition rate for veterinary medicine was the lowest of 28 U.S. schools in that academic year — by more than $5,500. Within the Big Ten Conference alone, Wisconsin’s vet school tuition for nonresidents is nearly $19,000 cheaper than the next lowest nonresident rate at Purdue University.

It’s a similar story in the School of Medicine and Public Health, where Wisconsin’s tuition and fees total $25,919 for a first-year resident and $34,815 for a first-year nonresident. That’s $17,606 less per year than the Medical College of Wisconsin on resident tuition and well behind Iowa, Indiana, Michigan, Michigan State, Minnesota, Illinois, and Northwestern in every category.

Skeptics might ask: Well, is that price gap because Wisconsin’s professional schools are ranked below those in other states or within the Big Ten Conference?

While there’s always a better school someplace, Wisconsin competes well on quality with most of its peers. That may not be true for long if the tuition gap continues to widen.

“We are falling farther behind each year, as other schools proceed with annual increases of 3% or so, and we remain frozen,” said Dr. Robert Golden, dean of the medical school and vice chancellor for medical affairs. “We are at the point where we cannot maintain the technologies and other key aspects of our educational program without relief in this area.”

UW-Madison Chancellor Rebecca Blank has argued that her campus needs more flexibility to set tuition rates that are market-driven. That’s particularly true with professional schools, which are expected to provide unique services to students, and to create more financial independence for such schools. It’s hard to argue that Wisconsin should be cranking out more veterinarians or general practice physicians if the school is struggling.

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There’s also a disadvantage to attracting top student talent if there’s a perception that low tuition is somehow tied to low quality.

“Few students think it’s an advantage to go to one of the cheapest schools in the country,” Blank said.

The tuition freeze was enacted in 2013 when the Legislature discovered a $648 million program revenue surplus within the system. In April 2014, Gov. Scott Walker announced he would like to see the freeze extended for another two years.

Lawmakers are right to be concerned about Wisconsin students paying more at a time when reserve funds appear high, but as UW System President Ray Cross noted during an October Board of Regents meeting, the raw revenue balances should not be confused with “true reserves.” Often, reserves are committed funds tied to performance metrics on research grants and other projects.

“We can account for every dollar,” Cross said.

Budget and tuition freezes have political appeal and can work for a while, but an across-the-board approach can hurt over time if market conditions are ignored. The market is telling policymakers that out-of-state students will choose to pay more (which helps to underwrite Wisconsin students) and that most professional school costs are too low to be sustainable. When the next state budget debate gets underway in 2015, proposals to grant more flexibility would make market sense.

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