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Study Supports Tuition Increase; Task Force Offers Recommendations

UNC tuition has room to grow, according to a pricing study released in November, but only if University grants and financial aid keep pace with the rising cost of attendance.

A report issued by Arts & Science Group LLC, a Durham-based firm hired by the University to examine the effects of tuition hikes on enrollment, found that both in-state and out-of-state markets would be adversely affected by price increases not accompanied by increases in financial aid.

The report was given to the University’s tuition task force in early November. The task force – a committee of students, faculty, trustees and administrators – drew on the report to create three tuition increase recommendations, which were presented to the Board of Trustees on Nov. 17.

The task force’s first plan would increase annual tuition by $350 in-state and $800 out-of-state, the second by $300 in-state and $1,000 out-of-state, and the third by $250 in-state and $1,200 out-of-state.

The task force recommended the first plan, and the trustees are expected to make a decision in January.

When raising tuition, UNC routinely sets aside a portion of the increase to offset the impact on students who depend on financial aid.

According to the report, “Price increases [relative to competitors] made without substantial increases in grant support would have negative enrollment consequences both in- and out-of-state. But the consequences would be far greater out-of-state, particularly with minority students.”

The firm also concluded that price increases for out-of-state students should not exceed increases at schools that compete with UNC for prospective students.

The group’s findings were drawn from 625 telephone interviews with students who requested information from the University as well as 625 telephone interviews with in- and out-of-state admitted students. Study participants received pricing information by mail and were surveyed on their reactions to four different levels of price increases, ranging from $300 to $1,200 in-state and from $1,250 to $5,000 out-of-state.

Arts & Science Group determined that unmatched price increases for North Carolina residents would result in a decline of 2 to 7 percent in enrollment rates, depending on the amount of the increase. Grants covering half the price increase would leave enrollment rates unchanged, and grants fully matching the increases would increase enrollment rates by 1.5 to 6 percent.

In contrast, the study found that increases in out-of-state costs would need to be fully matched by grants to leave enrollment rates unchanged.

UNC currently enrolls 64 percent of in-state applicants who are admitted and 31 percent of out-of-state applicants who are admitted.

Ironically, the survey found that the present cost of attendance at UNC was both a draw and a stumbling block for students who are admitted to Carolina.

“The academic standing of the University along with reasonable tuition and affordability rank among the most important reasons both in- and out-of-state UNC Chapel Hill admit-enrolls have chosen the University,” the report said. “Conversely, insufficient financial aid and scholarships are among the primary reasons in-state and out-of-state admit-declines have decided to matriculate elsewhere.”

While the report praised UNC’s commitment to meeting financial need for both in- and out-of-state students, it said the University lags behind other institutions in offering merit-based aid.

“Our extensive experience in financial aid and pricing with public and private universities suggests that [UNC’s] merit aid program has fallen behind its competition and that commitments to increased funds for grants regardless of need must be an essential part of future price planning,” the report said.

Creating new University-funded grants to attract out-of-state students and in-state students who would otherwise leave North Carolina were two recommendations offered in the report. Others were building a competitor-based price index of competing institutions to track price increases, and raising out-of-state tuition for the next four or five years to maintain parity with competing schools.

The group also recommended raising the cost of attendance for North Carolina residents by $300 for two consecutive years while providing grants amounting to more than half of the increase. Additional aid to lower-income students and students from nonmetropolitan areas also would be needed.

Carolina’s cost currently is $4,451 for North Carolina residents and $17,549 for out-of-state residents. The costs include tuition and fees for one academic year.


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