Nancy Cooley Academic Affairs Director SHEEO Professional Development August 15, 2002 STATE COUNCIL OF HIGHER EDUCATION FOR VIRGINIA ADVANCING VIRGINA THROUGH HIGHER EDUCATION Balancing Affordability and Access: Challenges and Opportunities in Virginia

Mounting Pressures Virginia’s circumstances mirror those of most other states - Declining state general fund revenue - Increasing tuition and fees - Growing enrollments

Differing Perspectives Student/Parent: How much does/will it cost to attend college? How do we plan and save for college? How do we minimize the need for debt? Institution: What sources of revenue are available as we develop/implement our strategic plan? How do we attract and retain students? How do we provide access? State: What is state’s role in supporting pubic higher education? What is the appropriate “share of cost?” How do we plan for future investments in higher education?

Putting the Pieces Together State Share Student Share State Share Student Share Financial Aid

Policy Pendulum Tuition Policies – : Tuition and fees set independently by institutional boards. Tuition and mandatory E&G fees increased by 50%, on average, statewide in four years – 1994 – 1996: Governor and General Assembly cap tuition increases at 3% annually. – 1996 – 1999: State policymakers “freeze” tuition – 2000: Governor requires institutions to “rollback” tuition 20% replacing tuition revenue with general fund support. – : State-mandated tuition freeze continued. – : Tuition setting authority returned to institutional boards.

Policy Pendulum Student/State Share of Cost – 1976 – 1990: Explicit policy that students should cover a standard percentage of the cost of their education In-state undergrads at 4-year institutions paid 25% of “cost,” with “cost” varying by institution based on mission In-state community college students paid 20% Out-of-state students paid 75% of cost State paid remaining shares – Policy abandoned during 1990s; reinstated as a “goal” in 2001.

Policy Pendulum Student Financial Aid – High tuition/high aid philosophy – Few explicit policies dictating appropriate levels of student aid until mid 1990s – : SCHEV recommended that the state provide enough support to meet 50% of student “remaining need” – State funding directed almost exclusively to support need- based aid for in-state, undergraduates. – 2001: SCHEV recommended that the state focus additional appropriations on most financially needy students rather than meeting 50% of remaining need for all students

VA ’ s Current Policies Student Financial Aid – SCHEV’s 2001 policy requires all students to assume a greater level of “self-help” with the intention of directing limited state funds to most financially needy – Policymakers have been slow to embrace because of perception that the new model encourages “student debt” Student/State Share – 25% goal reinstated for in-state, undergrads at four-year institutions; 20% at community colleges

VA ’ s Current Policies Tuition Policy – – The “Kitchen Sink” Approach – Authority returned to institutional boards with strong recommendation from the state not to exceed 9% annual increase (cap not binding) – Proportion of out-of-state students not increase at institutions currently with >= 25% out-of-state students – Boards also encouraged to look at a variety of factors when setting policy, including:

VA ’ s Current Policies Tuition Policy (con’t) – – Consumer Price Index – In-state tuition charges at public peer institutions – Ability to maximize resources through tuition increases on out-of-state students and graduate students – Capital costs not captured in the standard calculation of “cost of education” – Options that would require a portion of additional tuition revenue be set aside for institutional student aid – Impact of tuition increases on access and quality of applicant pool

Current Environment Explicit/implicit goals: – Make a college education affordable for in-state, undergraduate students – Promote access for in-state, undergraduate students (Limit access to out-of-state students) – Limit student share of cost – Limit student debt burden – Ensure higher education is accountable for investment of public funds

Affordable education? By most indicators, a public college education is more affordable for most Virginia families now than it was a decade ago.

Affordable education?

National

Current Pressures At least 32,000 additional students expected in the next decade (10% growth between 1990 and 2000) Declining state revenues – Average 3% general fund reduction to institutions' base E&G budgets in FY02; 9% for FY03; 12% for FY04 – Additional cuts expected – Higher education share of state budget at lowest point in a decade. Disparate financial aid policies

Current Pressures Public “memory” and/or “attention span” often reaches only a few years. Students and their families are impacted for a relatively short time. Virginia’s governor serves only one term (only state in the nation) and other policymakers often driven by 2-4 year terms. As a result, the only comparison of interest is the one of today. Long-term strategies tend to be less meaningful.

Realigning the Pieces How do we define “affordable”? Affordable for whom? Access at what level?

Realigning the Pieces SCHEV Affordability Study - Evaluate proposed changes to student financial aid allocations using student level data - Establish options for identifying a long- term tuition policy for the Commonwealth - Develop a methodology for determining the appropriate state share of cost

Realigning the Pieces Systemwide Strategic Plan – Quality and Access Working Group – Input from 18 regional focus groups and SCHEV constituent groups – Leadership from top-level Strategic Plan Advisory Committee

Governor’s Higher Ed Summit Planning and Capacity Committee – Enrollment issues – Program and site duplication – Patchwork quilt approach

“Selling” the Story Why this issue is important? – Students/Families - Ability to plan and save for a college education – State Policymakers – Ability to plan and invest in higher education and student financial aid – Institutions – Ability to carry out long-term planning based on predictable sources of funding

SCHEV James Monroe Building 101 North Fourteenth Street Richmond, Virginia Tel: (804) 225–2600 Fax: (804) 225–2604 TDD: (804) 371–8017 Web: STATE COUNCIL OF HIGHER EDUCATION FOR VIRGINIA A D V A N C I N G V I R G I N A T H R O U G H H I G H E R E D U C A T I O N