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CUCFA to Yudof Tuition Hike

CUCFA to Yudof Tuition Hike

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Published by Chris Newfield

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Categories:Types, Research
Published by: Chris Newfield on Nov 16, 2010
Copyright:Attribution Non-commercial


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So, you’re r
aising tuition again
 —reluctantly, and because you feel you have no choice, but, still, you’re doing it. You
raised it last year by an amount that would largely offset
 what the state had cut from UC’s appropriation during the
financial crisis. And this year you are raising it despite the fact that the state has restored half that dollar amount,
thanks largely to student protests. I’ll pass over the fact that you’re not using funds from this year’s tuition increaseto restore even half of last year’s instructio
nal cuts on UC campuses. Instead, you encourage students to believe thattwo thirds of their new tuition will help avoid instructional cuts that would otherwise have occurred in some
imagined future. It is evident to all, however, that UC’s instructional c
ost (cost per credit hour) is going down sothat UC can channel funds into areas where costs are almost certain to go up
for example new constructionprojects that are unlikely to pay for themselves or research activities that will need to be subsidized (perhapsincreasingly) by enrollment-generated funds. It seems that instruction is one of the few areas where UCadministrators know how to economize, and that instructional fees are the only revenue stream that UC is confidentof being able to increase, perhaps indefinitely.
  Why are you so sure that students will accept ever-increasing tuition even if instructional quality goes down? Well,
I’ve never had the opportunity to ask you directly, but in my years of service on UC committees I’ve heard many 
times the usual explanation. It is, essentially, that higher education produces economic growth, which is why thestate should pay for it. But economic growth also produces growing income inequality, which is why certainindividual students should be expected to pay if the state does not. This theory made some sense in the late
twentieth century when California’s high tech boom produced income growth only in the top 20% of the
population (mostly educated), leaving 80% behind. In this context UC might reasonably expect the bottom 80% tobe less willing to pay for higher education through taxes and the top 20% to be more willing to pay throughincreased fees. But in the twenty-first century, when almost all income growth has been in the top 1-2% of 
California’s popu
lation, UC is still marketing income inequality to students as its most important product: it now expects all students to pay more for an ever-shrinking chance of reaping the ever-growing rewards that oureconomy makes available to the few. Your plan to increase revenue through tuition growth is feasible, of course,only because the federal government still allows students to borrow more for education despite the greaterlikelihood that they will not be able to repay 
student loans may be the last form of subprime credit available in oureconomy. As long as Californians regard equal educational opportunity as the same as equal access to credit, youcan hope that they will borrow more for education as income inequality grows, even (and perhaps especially) intimes of recession when economic opportunities are shrinking. If income inequality increases faster than theeconomy in good times, and also increases in bad times, it would seem that UC has a recession-proof plan forrevenue growth, even though debt service on student loans can reduce post-matriculation spendable income for aslong as 25 years. This cap is very recent
a reform enacted by the Obama administration, which recognized thatstudents loans are not as easily repaid as they once were and that many higher education institutions are engaged ina form of predatory lending. You have also recognized that financing higher education through increased personal debt is a growing problem formany students.
 That’s why you argue
that UC tuition increases will not deter attendance provided that the Blue and
See Meister, “They Pledged Your Tuition” 
Gold program, which relieves families from paying tuition, is available to a wider income band. Much of the pressand the public seem to have bought your claim that higher tuition can actually make UC more accessible by 
extending UC’s Blue and Gold program
to families with annual incomes of up to $80,000. But the high tuitionburden still falls disproportionately on those just
this cut-off, so you mitigate this obvious problem by giving students a one-year reprieve on tuition increases if they are
eligible for aid and if they come from families with incomes of $120K or less, after which they will simply have to borrow more.
You then claim that highertuition would leave the majority of UC students (55%) with undiminished or improved access. This claim is basedon two assumptions: first, that the incomes of UC graduates will continue to grow 
and to grow much faster, thanthose of other Californians, much as they did during the high tech boom; and, second, that Blue and Gold meansthat most UC students on financial aid will need to borrow less in order to attend. According to your own, internal, financial aid studies, both of these assumptions are false. The first assumption isfalse because the income of UC graduates has not increased at all for the past ten years, and neither has the willingness of most students who borrow to take on greater debt. As a consequence of their growing debt-resistance, UC has a growing middle income access problem
it seems that students in the income band that takeson the greatest proportional debt are also
transferring down 
within the Master Plan scheme
and that 70% of Community College transfer students now go to for-profit institutions.
So, we now have a Master Plan that seemsto operate in reverse. The second assumption is false because raising the Blue and Gold income cap from $60K to $70K, and now to aproposed level of $80K, is not fully paid for by the 33% return-to-aid generated by higher tuition, which the public,has been led to believe. It is, rather, funded
and much more so as the cap goes up
by increasing the amount
that all students are expected to provide as “self 
help” (their “loan/work expectation”). This higher amount willthen be subtracted from their total “financial need” before aid packages are awarded.
 Your Financial Aid Directors have therefore
criticized Blue and Gold as a “a political plan, not a practical plan” for
improving middle income access,
because, as the Blue and Gold eligibility increases, the 63% of UC students now on financial aid would each receive smaller aid packages, and thus be expected to earn or borrow more for theireducation.
So, yes, the “full financial need” of students will be funded, but the definition of “full financial need” will
so that all students currently eligible for financial aid, including those from very poor families, will be
 This reprieve only softens the immediate blow of the tuition increases for
students in this income band (probably no more than40%) and is irrelevant to the permanent effect of the increases on student access and student debt.
Colleen Moore and Nancy Shulock, “Divided We Fail: Improving Completion and Closing Racial Gaps in California’s Community Colleges,” 
In 2008, just before the financial crash, you commissioned a study on how to improve middle income access if UC followed your plan toincrease tuition indefinitely. The commission, which was chaired by Berkeley Chancellor Birgeneau, reported that family contributionstoward a UC degree for those on full financial aid came to about 8% of their income in 2008, but that they steeply rose to 17% at the $90K income level financial aid phased out and full tuition phased in; it then fell back to 8% for incomes at c. $200K, while continuing to declineas family income rose and tuition remained constant. (If the top 1% paid 17% of their declared family income for each child attending UCtheir total cost of attendance would be $306K, which is 9x what they presently pay.) The commission concluded that students from families earning $70-
140K were (or would soon be) at a “tipping point” in terms of 
 willingness to borrow more to pay for tuition increases, and recommended the return-to-aid from undergraduate tuition from 33% to 45%in order to put more money into financial aid as tuition grew. This recommendation came just before the financial crash, when tuition shotup by 32% (to c. $10K) even as student financial need was dramatically increasing. But you did not follow it. Instead you decided torepackage
existing funds (Pell Grants, Cal Grants and UC Grants) as UC’s “Blue and Gold Opportunity Plan”— 
 which is essentially atuition discount based on family income alone (i.e., without considering other need factors. UC Financial Aid Directors have opposed Blue
and Gold as “a political plan, not a practical plan” to address the middle income squeeze identified by the Birgeneau commiss
ion. One
reason for their opposition is that UC’s Blue and Gold eligibility formula is base
d on a single factor (family income), and thus implicitly diverts the UC grant funds generated by higher tuition away from students whose financial need is based on other factors. A deeper reason,discussed above, is that funding to raise the Blue and Gold cap will come increasingly from reduced the financial aid packages that go to all
students in need. “
Strategic Options for Guaranteeing Long-Term Financial Accessibility for UC Undergraduates
,” (March 2008), posted at
expected to pay more.
No wonder UC is expecting to lose middle income students, despite Blue and Gold. And no
 wonder you are changing UC’s admissions policy to replace those students with out
-of-state students who now pay more to attend less prestigious universities in other states that do not have anything resembling the CaliforniaHigher Education Master Plan.
In June 2010 you asked your financial aid staff to report on the “middle income problem” in the aftermath of lastyear’s student protests against tuition increases. They studied the possibility of raising the Blue and G
old cap tofamilies with incomes of $120K. This promise of discounted tuition would have provided 8000 additional studentsan average fee offset of $4.4K, but it would have cost $37M in new financial aid funds or in reductions to the aidpackages of existing recipients. But you were not willing to use $37M of the funds Governor Schwarzenegger
unexpectedly restored (or any other funds at your disposal) to mitigate last year’s fee increases for these students— 
and the UC Education Finance Model (EFM) Steering Committee was reluctant to proceed with what amounted toa public relations gimmick that added no new funds to financial aid, and would be paid for by reducing packages forexisting recipients. They eventually compromised with you
on a “Blue and Gold” guarantee of $80K 
that willrequire them to take much less out of student aid packages than the amount necessary to fund a $120K cap on Blueand Gold, which would have made a much bigger political splash. , The June financial aid study also presented amore radical alternative that would have capped the parental contribution at 10% for family incomes up to $120K. That approach would have cost $120M and benefitted 20,000 students by an average of $5.9K.
But it was not inthe cards if you were looking for a public relations pitch that would give the appearance of greater middle income
access to UC while costing it nothing, even as tuition goes up. That’s what your November 8 letter really does.
  What do I think you should have said on November 8? The two of us would probably agree that UC should betuition-free and tax-supported; that the tax system should be fair and progressive, and that the burden of debt (orsavings) that many taxpayers already bear for social goods that should be public, such as healthcare and education,makes it hard for them to pay new taxes on top of their existing debt service. Our disagreement is over what youshould say now 
at the November Regents meeting and at every future Regents meeting. For you, it seems, thequestion is how fast to wean UC away from state funds. For activists on your faculty and staff (and here I speak formany) your constant, ongoing, task should be to articulate and embody the values of a public university as distinctfrom those of privates and for-profits. Some for-profits prey upon the fear of being left behind to drive students sodeep into debt that they may never get ahead. If you really want more taxpayer support for UC, you must come outagainst that fear. This means that you should stop selling income inequality (along with new technology)
as UC’s
most important product and start selling greater equality. In every revenue model and in every spending priority UCneeds to repurpose itself as the driver of greater social and economic equality it once was. Here are some modeststeps you could take if your goal is to avoid UC privatization rather than to hasten it:1)
 You could ask the Regents to cap parental contribution at 8% (the amount paid by the poorest) for allfamilies reporting income of up to, say, $140K. A methodology of capping family contributions would at
least introduce a hair’s breadth of difference between UC’s approach to middle income accessibility andtuition discounting that is offered by many privates that now have a lower “net tuition” than UC.
 You could ask the Regents to increase the return-to-aid portion from undergraduate tuition and put thosefunds into student grants. Doing this could generate sufficient funds to finance a cap on parental
contributions without having to increase the amount students are expected to provide in “self 
 You could propose a free tuition option for all students, regardless of financial need, who are willing to pay a percentage (5-6% ?) of any future income above, say, the 75
percentile for a period of time, say, 15-20years. This proposal could be funded with no additional revenue from the state if UC were to use itsexcellent bond rating on Wall Street to fund student access rather than new buildings that will in many cases
“Report on Financial Aid and Scholarships” (October 10, 2010), posted
UCOP has already decided that, by 2012, only 10% of in-state graduates will be guaranteed admission to UC
down from12.5%.
UCOP, “Options for Extending Financial Aid to Middle Income Undergraduates,” posted at

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