0 Our Students Aren't Customers

Posted by Atsumori. Category: admissions yield , differential tuition , discounting , in state students , out of state students , UW Madison

At Monday's Faculty Senate meeting, I'll deliver the annual report from the Committee for Undergraduate Recruitment, Admissions, and Financial Aid (CURAFA). I have chaired that committee for several years, and while it is not usually something I discuss on this blog, I want to address a comment I made at the last meeting.

At that meeting, my colleague Adam Gamoran delivered a report from the committee on faculty compensation, and as part of that report suggested that the university raise more funds to pay faculty by increasing the overall number of undergraduates from out-of-state (OOS). He was not suggesting we decrease the number of in-state (IS) students, but rather that we grow the total number of undergraduates by enrolling more OOS students.

As CURAFA had not been told this suggestion was forthcoming, and I had not read his committee's entire report for the meeting (my fault), this took me by surprise.  In keeping with my scholarly work on higher education policy, I was aware of the likely reaction from students and the public to a proposal that could easily be read as an effort to put on onus on students and families to fund salary increases. Of course, Adam meant that this was needed only because the state wasn't doing its job of funding the university, but it was also clear right away that this wasn't the media message that would carry.  Further, the idea of increasing enrollment among OOS students was something CURAFA had discussed several times with the Office of Admissions, and it was clear from those conversations that this strategy was much easier said than done.

That is because the percent of OOS who enroll at Madison after being accepted is quite low. That "yield rate" is just 22% for domestic non-residents (this excludes Minnesota) -- lower than the national averages for public universities.  The large gap between applications and enrollments among OOS students is a function of many things-- many students apply to large numbers of institutions to improve their odds of admissions or odds of getting multiple offers that can be negotiated, and also many OOS students expect to be offered a nice merit scholarship to induce their attendance.  Yield is thus a far better indicator than applications of how many students truly prefer UW-Madison and can afford to attend it without scholarships.  The latter shouldn't matter generally, but in the case of OOS students, if we have to heavily discount their costs then we will not generate enough revenue to fund the growth in compensation the faculty desire.  Recent trends indicate that discounting is beginning to fail as a mechanism for attracting students, more of whom seem put off by the higher tuition charged for OOS students at public institutions, and private institutions more generally.  Moreover, UW-Madison is unique is being among a handful of public universities bucking the trend of shifting most financial aid from need-based to merit-based-- giving out relatively few scholarships to freshmen (scholarships to upperclassmen are another matter).

A few more specifics. Over the last ten years, UW-Madison's yield rate among domestic non-residents dropped from 26%  to 22%, even as applications for that group doubled.  During the same period, the yield among international non-residents dropped from 37% to 20%, as applications for that group increased sixfold.  But during that time the yield among Wisconsin residents grew from 60 to 62%, while the number of applications remained steady.   That yield among Wisconsin residents is very high, much higher than the national average, and is likely indicative of demand for more seats among Wisconsin taxpayers.

So the punchline is this:  demand among OOS students for enrollment at UW-Madison simply isn't very strong. That's what I honestly intended to say to the Faculty Senate in my remarks. Accomplishing what Adam's committee was suggesting therefore requires shifting (a) the distribution of merit-based aid, and/or (b) the admissions standards for OOS students.  Right now admissions standards appear to be applied similarly for IS and OOS students, on average.  Unless merit-based aid is used to increase the yield substantially, and unless that discounting is actually successful, growing the number of OOS students would require accepting more OOS students-- and this likely means digging deeper into the application pool.  It is an open and important question as to whether UW-Madison, its faculty, and its constituents want to have differential admissions standards based on residency.  That discussion should be had upfront and publicly, and should not be secondary to (or disguised behind) questions about whether the strategy will generate money.  That has been my point all along, and one I am admittedly quite emotional about since it's my view that UW-Madison's greatest strength is its commitments to high-quality education and service to the state, and its longstanding tradition (including among faculty) of putting those things ahead of monetary concerns.   Ours is not a culture rife with showy displays of consumption; instead we dig in and we focus on our students and our research.

Sadly, I failed in my remarks to make these points.  Moved to respond quickly and without time to gather myself sufficiently, instead I erred in suggesting that the applicant pool of OOS students was weaker academically than that for in-state students. The publicly available evidence (presented in terms of group averages) does not show this to be true, and I regret that I was not better prepared to state my concerns about the yield rate better, or able to discuss why I have some reservations about the data we do have available.  In the future I hope CURAFA and committees making recommendations related to admissions and financial aid will communicate better, so that we can all be better equipped to respond on the spot to proposals and questions at Senate.

Now, I know that some will contend we can simply increase the yield of high-achieving students with better recruitment. I disagree, mainly because this will require substantial additional resources for our relatively small admissions office (eating up the projected revenues from the new students), our Badger Alumni are already doing yeomen work, and because we are losing high-achieving OOS students to places we simply cannot and arguably should not be competing with.  For this group, our yield is just 15% -- 35% go to private institutions like Northwestern, 23% end up staying in-state, and 19% go to another out-of-state institution.   To capture the latter two groups, we have to spend more money through effective discounting -- recruitment alone won't do it.

I'll close with some final words about the overall strategy of using OOS students to increase revenues. It sounds too good to be true because it is.  Yes, it seems efficient and even equitable--if you support redistribution among students).  But as Christopher Newfield has pointed out, the "market-smart and mission centered" approach has a thin empirical evidentiary basis (in fact  more examples of market failures than market successes surround us these days) and brings with it some slippery-slope unintended consequences.  Here's one we are all familiar with: over time, UW-Madison has begun to feel more and more elite-- to both the faculty and to the state.  John Wiley spoke of this concern when he was chancellor, and commissioned a study to look at whether in fact family income among UW-Madison students was increasingly out-of-step with Wisconsin family incomes.  The answer in short is that the reason it feels this way is because of the increasingly high family incomes of OOS students.  The growing proportion of students from wealthier families on campus changes the feel of the place in ways both large and small-- they drive demand for more luxurious accommodations and services (witness Lucky!), enjoy clothing and other aspects of conspicuous consumption that make it harder than ever to "keep up with the Joneses,"and utilize their extensive networks and connections to take on powerful positions help lead votes to charge higher tuition and increase spending, so that UW-Madison will look like the private institutions where their friends attend.  Some even use the higher graduation rates of these more-advantaged OOS students to suggest (without any empirical evidence) that they graduate faster because they pay more.   Sure, they bring greater income and geographic "diversity" to some degree (though the real underrepresentation continues to be among students from below the poverty line) and some will say it broadens the horizons of all student-- but at the same time these changes make the flagship feel less and less like it's part of Wisconsin.  And therein lies the long-term problem.

Madison is not an island. It cannot hover into space, pulling apart from its land. Madison is Wisconsin.  And decisions about changing the degree to which it remains Wisconsin should be make democratically and discussed publicly, openly, and frequently and in arenas that separate these important questions about educational quality and climate from the ever-present, neo-liberalizing discussions about markets and revenue.  Treating our students as students, and not paying customers, is the very least we owe them.

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