College weighs financial paths
December 2, 2011
Tuition troubles at the College of William and Mary have reached beyond campus grounds, sparking debate in The Washington Post.
In a Nov. 6 op-ed piece in The Post entitled “Invisible Hand at William and Mary,” Peter Galuszka criticized College President Taylor Reveley’s ideas about conserving College resources by allowing the market to set tuition rates.
“This imbalance [in state support in education] has put pressure on the schools to push hard for out-of-state students attracted by the Virginia schools’ academic standards and pleasant campuses,” Galuska wrote.
“It also makes it harder for in-staters to win admittance. This can make for tears and gnashing of teeth in the spring when acceptance letters go out. (Full disclosure, I am a U.Va. parent).”
While the state provided 43 percent of the College’s funding in 1981, it now provides a mere 13 percent of the school’s budget. Over the past 30 years, tuition increases have become a fact of life for College students.
“A serious move back toward the support of a generation ago would be manna from heaven,” Reveley said in an email. “There isn’t the remotest possibility of this happening, however. Other demands on state revenues are too great. The era of significant state support is over, in my judgment.”
The strategy, explained by Reveley in an interview with Virginia Business magazine, is part of a new financial model stemming from the College’s Six Year Plan released in October 2011.
“The six-year plan doesn’t contemplate ‘market tuition’ for in-state students, however, simply a step toward their contributing more of what it actually costs to educate them,” Reveley said in an email. “At present there is a huge gap between what in-state and out-of-state students pay. We need to narrow it some, now that the state has cut back so much on the subsidy it provides for in-state students. While we have already drawn near to what it’s realistic to charge out-of-state students, we’re not all the way there yet. Thus, out-of-state tuition is likely to increase some, too, next spring.”
The current price tag of a College education hovers at $22,024 for in-state students and $44,854 for out-of-state students per year, yet it currently costs the College several thousand dollars more to educate one College student than what the state and tuition provide.
“In 1906, W&M deeded its real estate to the Commonwealth, and we’re now firmly and irreparably part of the state system,” Reveley said. “What we need is for the state to let the College use its strength in the market place to support itself, since the state taxpayers are no longer able to do so.”
Galuszka’s piece prompted Rector of the College and chairman of the Board of Visitors Jeffery Trammell to respond with another op-ed piece in The Washington Post supporting Reveley’s statements.
“Those who benefit from the university must make up the bulk of the lost state support,” Trammell wrote in the op-ed. “An essential component of our new funding model, however, will be to devote a considerable portion of any increased tuition revenue to financial aid for students from middle-class Virginia families who need it most.”
Financial aid has not kept pace with what other universities offer.
“I’ve had folks telling me that all things being equal they like W&M better but they couldn’t get financial aid so they went elsewhere. We really need to be competitive with this,” Trammell said. “Also, if I’ve got a bright young professor that’s getting offers from the best universities in the country how are we going to keep them if we don’t have the money to keep them? If were not charging market value?”
In Virginia Business magazine, Reveley said that out-of-state tuition was nearing its “saturation point,” making in-state tuition the most likely to rise.
According to Vice President for Finance Sam Jones ’75, M.B.A. ’80, this could mean in-state tuition increasing to the rates similar to schools of comparable quality. While Jones said that in-state tuition would not near that of the current cost of out-of-state students, the price tag for a Virginia student to attend the College would have to increase in order to compensate for a lack of funding.
“If the state came in tomorrow and offered us more money, we wouldn’t raise tuition. This is a matter of necessity,” Jones said.
Trammell noted that, if passed, the plan would increase tuition prices gradually over time.
“The Board’s commitment is the quality of William and Mary. People come to the College because of its excellence, they don’t come there because it’s the cheapest school in the country, and that shouldn’t be our goal. Our goal should be to provide a great education with financial aid for middle-income families. We just can’t sustain that educational model without greater resources,” Trammell said.
The administration has sent its financial model to the Virginia General Assembly for review. If passed and approved, the plan will be given to the Board of Visitors for a final decision in April.
“We won’t know what’s going to happen to W&M tuition until the BOV actually sets it next spring,” Reveley said in an email. “There is no meaningful way now of predicting how the state of the national economy and of Virginia politics are going to play out over the next five months or so.”
Despite Galuska’s warning that the College is paving the way to go private with such a strategy, Jones denies that this option is on the table. In order to privatize, the College would need to buy all its buildings and grounds back from the state with a price tag of more than $2 billion, after receiving approval from the state to break away.
“Privatizing is not anything we are proposing right now,” Jones said. “You can do the math and make the numbers work out, but politically, it’s not something we are promoting at all.”
For now, the College’s primary strategies to address its financial situation are making operations more efficient and encouraging alumni donations.