“On the heels of a 15 percent tuition hike, nonresident freshman enrollment fell to 1,015 this fall from 1,363 the year before. Corresponding net revenue fell to $23.7 million from $28.5 million…”
You can actually see that number of applicants really fell. Didn’t UMN used to get something like 48,000 - 49,000 applications? Per College Navigator, last year they were just shy of 44,000. Before, they were able to make up the fall in OOS with rising international representation but that might be harder to do now and going forward, depending on US policy w/r/t foreign nationals and visas and so forth.
I may be old school on economics 101, but I’m thinking that if optimal net revenue is the objective, another 10% increase in tuition isn’t the best idea when millions of dollars are at stake. Must be other variables involved, they don’t need the money, or maybe they didn’t consult their esteemed econ faculty.
1 Like
@illinoisx3 , that’s exactly what I was thinking, LOL. I even remember the line graph from my econ class.
Sorry peeps but the UMN Econ. faculty that I know are in support of this hike 
They know a bargain when they see one. UMN was significantly underpriced for OOS’ers for years; that’s now gone for good, and anyone who complains about it is just crying for the moon. There are tweaks that can be done, and there are costs that can be cut. Universities have a ton of waste.
Not sure what criteria the UMN Econ faculty are using but if you are operating in the elastic part of the demand curve, further increases in tuition will lead to a reduction in total revenues from the OOS students.
The OOS students reduced their attendance the first year of the increase. It was offset by additional international students so that total revenues still went up. This year might be different due to being on the elastic portion or because some parameters have changed (like international attendance). We don’t have the numbers for Fall 2018 so hard to say at this point.
There’s more to income than “revenue”. Cost cutting might be in order. Hopefully this revenue reduction will be a sign to address that aspect.
It doesn’t matter if your product is under-priced compared to the market, except for appearances. If you raise prices but sales fall so much that revenue decreases, then another big price increase probably isn’t the way to go if revenue is the driving factor. Like I said, they may not have revenue as the top priority. They may want to have higher prices just to be on par with other top regional universities like the article stated, or they may simply want to enroll more resident students anyway. They may no longer have increased GPA/SAT/ACT by attracting top OOS students as a goal. I would have to think the rank and file faculty want to maximize revenue so they can get reasonable salary increases;-)
Best I can tell, that article was referring to fall 2018 and a ~$5M drop in revenue. It seems they believe they can increase tuition another 10% AND increase non-resident enrollment 10% next fall, despite the trend to the contrary. The article cites more recruiting in Texas and New York that will offset, but of course there are costs involved with that as well. My kid’s already attending, so it doesn’t affect us; just an observation. I imagine returning student increases won’t be cut, as they’ve already got us hooked.
“It doesn’t matter if your product is under-priced compared to the market, except for appearances. If you raise prices but sales fall so much that revenue decreases, then another big price increase probably isn’t the way to go if revenue is the driving factor.”
- That implies that your product probably WOULDN'T be underpriced; put a bit more elegantly, that there are hedonic factors about UMN justifying the lower price. Kaler and the trustees rejected that hypothesis a few years ago and were pretty clear about why. When your school of engineering, business and biological sciences is facing 25 - 28% admit rates, you can probably charge a bit more in the big 10. Everyone knew that $22,000/year for an engineering degree from UMN was pretty much the best deal in America. @illinoisx3, other posters from IL told me a few years ago that UMN was very likely to be cheaper for their OOS kids than was UIUC in-state!
Revenue IS the driving factor. The primary job of a university president is to drum up revenue.
“Like I said, they may not have revenue as the top priority.”
- See above.
"They may want to have higher prices just to be on par with other top regional universities like the article stated, or they may simply want to enroll more resident students anyway. "
- I agree with part of this statement. There is likely a push to prioritize in-state residents and we are seeing that in the pattern of admission decision roll outs this year. UW-Madison is doing the same for their residents (even more than they had in the past). Perhaps they are trying to go the way of UNC or UT-Austin. They still want - and need - a number of OOS or else they wouldn't have gone on the CA. The reason they wanted higher tuition for OOS is that they felt they were leaving significant dollars on the table. They look to see what the other Big 10 uni's are charging so in that sense, "on par" is a signal that you are no longer doing so. And remember, up till this year the tuition hikes worked pleasingly well (as far as the trustees were concerned).
“They may no longer have increased GPA/SAT/ACT by attracting top OOS students as a goal.”
- Maybe. If anything the low end of test scores might have dipped a bit. But . . . there are other factors involved in that outcome. For instance, they have also put more emphasis on "diversity" and seem to have significantly increased their outreach to low SES, URM's, first gen, etc. The optional diversity statement introduced for the applicant pool entering Fall 2017 seems to underscore that stepped-up effort. So if the scores are dipping a bit on the low end, it could be that they have changed the profile of admitted students, and some - through no fault of their own - don't have the resources to bump that ACT score up. Not sure this has any impact on an OOS'ers decision to attend. It's getting harder and harder to get honors in the top colleges so test scores are still pretty strong.
“I would have to think the rank and file faculty want to maximize revenue so they can get reasonable salary increases;-)”
- Maybe - it's human nature to be grabby, though pretty sure many faculty were also OPPOSED to the tuition hikes :) It's possible to adjust the size of your department so that more is left over for others, if that's really an issue. Unless strong market forces and lots of offers from competing institutions happens to be driving the salary of a particular faculty member. That's undoubtedly true in some high performing departments, by the way, but perhaps less so in others.
UMN should be more like UW, with top faculty in ALL departments. Even if the number of majors is few and the department very small, it should be staffed with faculty who are considered to be tops in their field because a research university is centered first and foremost on producing quality research. The impact on undergraduate enrollment is indirect but genuine: top faculty attract top grad students, and top grad students not only become top researchers or faculty down the line, they also increase the prestige of the department and attract undergrads to study there. Obviously, it takes money to attract top faculty. But money can be had not only by increasing revenue but also by optimizing the size of every department, getting rid of dead weight where it exists. In addition, I’m guessing that - like all universities - there has been an explosion of administrative positions at UMN. There are probably some opportunities to eliminate waste there too.
“Best I can tell, that article was referring to fall 2018 and a ~$5M drop in revenue. It seems they believe they can increase tuition another 10% AND increase non-resident enrollment 10% next fall, despite the trend to the contrary.”
They have already begun admitting for Fall 2019. The pattern of acceptances is different from prior years. If cc postings are even remotely representative, then qualified women applicants to CSE from all over the US have already been accepted and given an invitation to honors. The guys - at least the “typical” high achieving male applicant - seem to be on hold for now but perhaps will start to hear back this weekend. Perhaps they are doing some particular targeting of candidates instead of just admitting whoever has certain stats.
“The article cites more recruiting in Texas and New York that will offset, but of course there are costs involved with that as well.”
UT heavily favors in-state, NY doesn’t really have a comparably-ranked state system so perhaps there’s some potential there. A friend who lives near the NYC metro tells me that UW-Madison is starting to show up on family radars there, but so far UMN isn’t. Still, last year there seemed to be an increased number of NY posters on the UMN cc threads so perhaps. UMN is still cheaper than UW and the engineering/bus. comparably ranked or superior.
“My kid’s already attending, so it doesn’t affect us; just an observation. I imagine returning student increases won’t be cut, as they’ve already got us hooked.”"
Yes, I believe this just impacts the FTIC kids.
As recently as admits for fall 2017 when my son opted to go to UIUC engineering over UMN, the 4-year totals were more or less similar in cost to UMN non-resident totals with projected tuition increases, even with a 10K/year National award factored in. I have no doubt that a few years ago when the National award covered the difference in resident and non-resident tuition and Minnesota tuition was much lower, it probably was quite a bit less expensive for an engineering degree. UIUC now also has the benefit of capping tuition for at least a few years, and once admitted, the tuition and room&board costs do not increase while you remain full-time over 4 years by law. That can tip the balance compared to looking only at first year costs.
For this fall when my daughter started, UIUC was considerably cheaper at the base resident tuition (non engineering) rate, even with similar UMN merit awards. Over 4 years, those tuition increases really compound. She chose UMN for other reasons and the scholarships still put it just within range, thankfully. With another 15% bump, I may have not even allowed it to be considered if she had started next year.
Based on what I’ve read, they’ve already passed the sweet spot. Holding to cost of living increases seems more prudent than another 10% increase if the millions of dollars in lost revenue is a concern, but that’s one reason why I’m not a regent;-)
D18, Illinois resident, was very enthusiastic about attending UMN, got admitted, and got a whiff of the new OOS tuition. and tuition trends and that was that. Very few of the students from our North Shore (Chicago) high school accepted their admission at UMN this year. We got the message!
I’d really like to see those 2018 enrollment numbers in detail (UMN OIR website). They haven’t been posted yet. Wondering what the holdup is.
A while back they mailed parents of matriculating students about wanting to cap increases to 5.5% in future years. I ran some numbers and compared to current inflation numbers and that can still amount to nearly $10000 of unanticipated expenses or debt for families not aware of these large increases that compound to big numbers over 4 years. I received an email reply to a suggestion I sent to the president and board about considering increases to match inflation (2.5 to 3.0%) instead for next year. They basically said such increases are common to cover salaries and programs. I also know a couple professors on faculty and asked if their tuition and programs had increased 15%, 10% or even 5.5%. They both chuckled. I can appreciate increasing tuition for new incoming freshman, as they should be comparing costs and can always pick a different school that is a better value. For returning students, transfer isn’t usually a good option. I feel the board and president just don’t understand the reality of how increases of even a few extra percent above inflation can compound over 4 years and crush a student who didn’t plan for it. While 5.5% is the number I have used all along, I suspect a lot of parents and students don’t factor in even 2.5% cost-of-living increases for tuition/R&B 
I applaud your communication efforts, @illinoisx3. Is there somewhere we can see the projected tuition/fees/r&b for returning students for 2019-2020? The 5.5% number is what I kind of had in mind, but of course the FAFSA came back this year with a lovely higher number for EFC. I am trying to budget differently for my DDs next few years, but that percentage is particularly high with other schools freezing tuition at their rate of first year.
I have not seen any proposals yet, but I had the impression from one email that they intend to have a tentative plan for any increase this month or next at their meetings. I think this is the usual timeline from the past couple years that I’ve followed the process.
The tuition proposal comes out in mid- Dec, IIRC.
Proposal is in.
http://www.mndaily.com/article/2018/12/n-regents-interview-presidential-finalist-joan-gabel
"The board voted to increase non-resident, non-reciprocity tuition by 10 percent starting next fall. Tuition for continuing students will increase by 5.5 percent.
.
.
.
Student representative to the board Jael Kerandi said she and other representatives collected 600 letters of feedback from the student body, some of which were shared with the regents.
Kerandi criticized the tuition increase at the meeting and said it would negatively affect the University’s student diversity. She added that the rate the University’s tuition has increased in past years is unsustainable and leaves a “bad taste” in the mouths of parents and students who pay tuition. "
Yes, a very bad taste, especially for returning students for whom it is difficult to make a choice to go elsewhere. It’s clear that some of the regents are out of touch with how expensive college is and don’t actually understand the effect that compounding can make when you increase even a couple percent above cost-of-living increases.
Am I missing something here? UIUC OOS tuition seems to be very similar to UMN, but UMN provides many more scholarships, and I expect it to be significantly cheaper for me (a Washington state resident).
Oh my. Is that for this fall? a 10% increase? Would be really nice if we could get some merit aid…