Many taxpayers mistakenly assume that their tax dollars are subsidizing the education of OOS students, not recognizing that their tax dollars pay a small and declining share of public universities’ bills. At the University of Michigan, for example, state subsidies now represent something like 5% or 6% of annual operating costs. The rest comes from non-taxpayer sources, like payout on endowment (thus ultimately from private contributions); annual giving by alumni; competitive research grants won by university faculty and research staff; intellectual property royalties and licensing fees; revenues from the university’s health and hospitals system; and tuition. The student body is about 2/3 in-state and 1/3 OOS, but OOS tuition is about 3 times as much as in-state tuition, and in addition the university guarantees it will provide FA to meet full need for in-state students but not for OOS students. As a consequence, most OOS students are full-pays, while a substantial fraction of in-state students are on university-provided FA. It’s hard to calculate exactly, but my guess is something like 2/3 to 3/4 of the university’s tuition revenue (net of FA) comes from OOS students. So Michigan residents aren’t subsidizing OOS students; the reality is that OOS students are effectively subsidizing in-state students, because without that OOS tuition revenue the university would be forced to dramatically increase in-state tuition, sharply cut back need-based aid for in-state students, make deep cuts in academic programs, or perhaps all three.
The article is written as if generating revenue from OOS tuition is somehow an illegitimate objective. But that’s being done not to turn a profit or line anyone’s pocket, it’s being done to pay the bills and keep the university operating. And at least in Michigan’s case, it’s not as if more highly qualified in-state students are being turned away in favor of less-qualified but higher-paying OOS students. In the last admissions cycle, Michigan had about 10,000 in-state applicants, of whom 50% were accepted, while only about 20% of its 40,000+ OOS applicants were accepted. If anything, the OOS applicant pool was on average more qualified, as were in all likelihood the OOS admits. If Michigan were to stop admitting OOS students and replace them with a like number of in-state students, it would not only blow a giant hole in the university’s budget, it would sharply lower admission standards and diminish the quality of the student body. All of that would be a huge disservice to the very large number of Michigan residents who under current policies are able to attend a world-class university at an affordable price.