Unintended Consequences of Tuition Reciprocity

February 1, 2013 | Blog

Providing more students with a variety of college choices is a good thing.  But I’m beginning to wonder about the unintended consequences of policies that try to accomplish it.

Take the case of Wisconsin, which shares a tuition reciprocity agreement with Minnesota.  Many students, especially those living on the borders of the two states, and those who don’t get a place in their flagship university, choose to attend college in the other state. That’s very nice, of course, and very neighborly. And, according to the press, it helps the state attract “the best students.”  But every policy has its downsides, and in this case there may be several:

(1) It seems to nudge data reporting toward the uninformative. Since both Minnesota and Wisconsin are treated as residents for tuition purposes, the vast majority of official reporting from the state and the campuses combines the two groups.  This makes it hard for the public to examine the characteristics of Wisconsin residents.  For example, say in order to assess equality of educational opportunities you wanted to compare the % of Native Americans among Wisconsin residents statewide to the % of Native Americans among Wisconsin residents enrolled at UW-Madison.  It’s not in any publicly available report, since reports like these aggregate MN and WI students together.   (Sure, this could be changed without altering the reciprocity agreement, but right now there seems no incentive to do it.)

(2) It confuses discussions about key enrollment issues such as the cap on the proportion of non-resident students. Presumably, this cap exists to protect spaces for Wisconsin residents.  But the cap, which is now 27.5%, doesn’t actually do this since in theory it could be met by enrolling 10% Wisconsin students and 67.5% MN students.  It says nothing about the distribution between WI and MN within the resident category. It also makes UW-Madison look like it enrolls relatively few non-residents compared to its peers, when in fact the opposite is true.  In fact, if MN students counted as the non-residents they really are, UW-Madison would have to ask itself whether having a large concentration (~12%) of MN students is the best way to diversify the student body.

(3) It may contribute to brain drain. This is typically defined at the out-of-state migration of bachelor’s degree holders. But how many students migrate post-high school but before the bachelor’s degree? How many students do we send to MN for college, because they are outcompeted by MN students for seats at Madison, for example? And how many of those return to pay taxes in WI?  I have no idea, but it’s worth exploring.  If MN weren’t an option, might those students still attend college — but in Wisconsin, at one of our many universities facing declining enrollment?  Of course, we should consider this in relation to how many MN students who attend college in WI choose to remain here, and pay taxes.  To the best of my knowledge, this issue hasn’t been examined in decades.

(4) It may reduce the incentive to invest more in UW-Milwaukee. Very few reciprocity students from Minnesota choose to attend Milwaukee, but many Wisconsin students who cannot get a seat at Madison seek Minneapolis instead.  As Provost Paul DeLuca has said, “Those well-qualified kids who want a big-city experience are inclined to think about Minnesota.”  Frankly, that’s a problem: we need to give them reason to think about Milwaukee, a research university in Wisconsin’s major urban center.  Maybe if Minneapolis wasn’t such a cheap option, there’d be more pressure to enhance Milwaukee or grow UW-Madison.

(5) It seems to cost UW-Madison tuition revenue it can’t afford to lose. Madison currently enrolls 3,305 Minnesota students.  Each pays slightly more than resident tuition, but the surplus is returned to the state, to settle up with Minnesota. Madison keeps only the resident portion. If instead, all Minnesota students paid out-of-state tuition, or were replaced by out-of-state students who did, UW-Madison would have nearly $27 million more revenue from tuition. Some would be lost to financial aid, sure, but that’s an enormous amount of money.  Now, I know that the issue of net tuition loss is frequently considered, and assessed to ensure that neither the entire state of Wisconsin or Minnesota loses in the deal– but the fact that there’s no loss to either state as a whole, and the fact that more MN students come to WI than vice versa, doesn’t mean that individual campuses don’t lose.  While overall, I think a system perspective on finance usually makes sense, if this revenue could be used to ensure Madison remains affordable, a change is worth considering.  At River Falls and Superior, where enrollment depends heavily on attracting Minnesota students, reciprocity may be a financial win, but at Madison it may be a net loss.  Since it clearly has different implications for college choices at each campus, a differentiated policy in this case could do little harm, and much good.

Ok, if Madison weren’t a reciprocity option for Minnesota students, maybe they would end the agreement entirely– but this is short-sighted and will likely affect their border schools too. A recent report from the Legislative Fiscal Bureau notes that when the reciprocity agreement originated in 1965, it involved only border campuses, and “to be eligible, the student had to be an undergraduate whose legal residence or high school was no more than 40 miles from the institution attended in the other state.” Is it time to return to this?

To be clear, I’m not saying anything about the quality of Minnesota students.  I like them, I teach them, and I work with them.  This is a question about policy and how it works in practice.  It seems to me that the reciprocity agreement could be changed to exclude UW-Madison and still keep its positive features, while removing many of its potential negatives. Of course, the cap would have to be adjusted– but not to admit more non-Wisconsin students–just to reflect actual reality.  And that, in terms of data reporting, would be a good thing.

2 Comments

  1. Reply

    Pamela Oliver

    February 4, 2013

    A 2009 report by Witte and Wolfe at La Follette says Minnesota students are much wealthier than Wisconsin students. See the 4th article in this publication: http://www.lafollette.wisc.edu/publications/policyreports/policyreport18_2.pdf

  2. Reply

    Anonymous

    May 15, 2013

    What about the wisconsin residents who choose to go to school in Minnesota? Every school does not have the same programs nor the same reputation for a particular program. I'd not want to stop wisconsin residents from an opportunity to study in Minnesota because they simply could not get the equivalent program here.


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