SHEEO releases The State Imperative: Aligning Tuition Policies with Strategies for Affordability

Thursday, November 9, 2017

Contact:  Robert E. Anderson, President, State Higher Education Executive Officers  (303) 541-1605 (randerson@sheeo.org)  or Andy Carlson, Principal Policy Analyst, State Higher Education Executive Officers (303) 541-1607 (acarlson@sheeo.org)

The report is available on the SHEEO website here.

Boulder, Colorado – The State Higher Education Executive Officers Association (SHEEO) is pleased to release its eighth report on the policies and procedures governing tuition and fee rate setting and financial aid at the state level: The State Imperative: Aligning Tuition Policies with Strategies for Affordability. According to Lumina Foundation (whose generous support made this report possible), 40 states now have attainment goals. Meeting these goals requires focused efforts to address the rising costs of postsecondary education and college affordability; however, 68 percent of survey respondents indicated there was not a unified strategy to address affordability that considers tuition, fees, and financial aid. Instead, most states are addressing affordability at the margins through aid programs or policies to encourage desired student behavior. How tuition rates are set each year may significantly impact their effectiveness.

Rob Anderson, president of SHEEO, writes that “It is critical that states consider the role that tuition policy plays in overall student affordability. A multi-year state strategy that leverages state appropriations and financial aid along with tuition would provide students and their families greater certainty that obtaining a postsecondary credential is within their grasp.”

In this report, SHEEO recommends that its members, state policymakers, governing boards, and institution presidents work together to develop strategies aligned with states goals to guide how tuition and fees are set each year. This type of approach would:
• Incorporate tuition policy into broader affordability and attainment strategies;
• Seek coordination of key institutional revenue sources;
• Consider the impact of tuition policy on state financial aid programs;
• Consider institutional revenue needs when implementing tuition freezes;
• Establish more transparency around institutional expenditures; and
• Take a multi-year, transparent approach to tuition policy.

Each state’s process is different but regardless of how tuition rates are set in a state, some balance must be struck between the cost to students and families and the revenue needs of postsecondary institutions. That has led some state legislatures to set limits on tuition and fees. However, hard limits on allowable tuition rate increases that do not take institutional revenue into account have the potential to undermine state attainment strategies when the institution lacks sufficient funds to provide key supports and services, especially low-income and underserved students. Andy Carlson, a principal policy analyst at SHEEO and one of the authors of the report, recalls his time working at a state SHEEO agency: “Each year the legislature set a different limit on how much tuition could go up. There was no incentive for governing boards to do anything other than increase tuition to the maximum allowable limit. A longer-term approach would go a long way to enabling governing boards to balance cost with revenue needs.”

“After a decade of state disinvestment, tuition has emerged as a primary revenue source,” said SHEEO Executive Committee Chair Eileen Klein. “It is imperative we work together to balance the cost to students and families with the need for institutional revenue. Transparency and accountability must be our guideposts as we ensure sustainability for our institutions and address affordability for our students and families.” Klein also is president of the Arizona Board of Regents.

While no state has fully adopted these recommendations, there are best practice examples highlighted in the report. John Armstrong, a SHEEO policy analyst and one of the authors of the report noted: “States like Virginia, Texas and Ohio (among others) have adopted different means of addressing affordability and their tracked progress toward ambitious and measurable goals unites their efforts to make college affordable.”

SHEEO’s periodic surveys of state tuition, fee and financial assistance policies detail the tuition setting process, analyze strategies to price tuition and fee rates among states, and examine the interaction between tuition and fee policies and financial aid. This 2017 version of the report was expanded to note how tuition policies are used for attainment goals, and case studies were added on a variety of topics, such as how states address affordability for students through tuition, fee and financial aid policies.