Get rid of the UC tuition subsidy

The Times’ July 20 editorial, “ UC gets smarter about cuts, applauds the efforts of the University of California system to boost revenues by increasing enrollment of higher-paying out-of-state students. While providing desperately needed funds in the short run, this strategy is essentially a “beggar thy neighbor” policy applied to public education; that is, an attempt to recruit “outsiders” to pay for the void created by declining local support.

The politically driven scenario to maintain low resident tuition and enroll nonresident students leads to a fascinating paradox. Imagine the plight of a highly qualified California resident applicant who lives within a few miles of the Arizona border and is willing to pay out-of-state tuition to attend UC Berkeley. But she is told by the university she cannot do so. Why? Not because she is not qualified but because the state of California believes it should maintain a low tuition for all California residents; they will not allow her to pay more. Her choices are to establish residency in Arizona or attend a private university or another state’s top public university. Either way, the UC system loses a highly qualified student and perhaps a productive resident in the future.

In the current system, in-state capacity is limited by the political desire to provide low-tuition access. Qualified resident students who are willing to pay the higher nonresident tuition are prevented from doing so and, in essence, face a form of rationing because there is a political reluctance to support substantial increases in resident tuition. Ironically, in California and Illinois, for example, this scenario is causing a migration of residents who become the nonresident students of neighboring states (Arizona and Iowa, respectively). In the end, states trade students among themselves to enhance revenue.

We believe that the political arguments for low tuition need to be dominated by tuition-setting strategies that provide a preferable social outcome whereby students are chosen based on ability and not on how much they pay. Currently, California subsidizes all resident students, including many who do not need a subsidy. Tuition needs to be increased for all students; access for qualified students who cannot afford to pay should be provided through the state income tax system, not through a subsidy for all. In the end, the state would subsidize only those residents who truly cannot afford to attend. And UC Berkeley would admit the most qualified students regardless of which side of the Arizona border they live on.

Gary Fethke is professor of management sciences and former dean of the Tippie College of Business and former interim president of the University of Iowa. Andrew Policano is dean of UC Irvine’s Paul Merage School of Business. They are currently writing a book, “Public No More: The Struggle for Public Universities to Survive.”