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Strategic Budget Advisory Committee (SBAC)
Strategic Budget Advisory Committee

Some Doubt Granholm's Tuition Freeze Will Aid Students

February 5, 2009

By ROBIN ERB
FREE PRESS EDUCATION WRITER

With tuition at Michigan's public universities jumping by 26% over the last three years, Garry Mundy says he's ecstatic about Gov. Jennifer Granholm's proposal to freeze tuition.

The 18-year-old from St. Clair Shores expects to carry about $60,000 in student debt by the time he graduates from Eastern Michigan University: "I'm trying not to freak out about this stuff."

But beware, say national experts and Michigan university officials. Granholm's plan is certain to trigger resistance from the universities, and it's not clear how much it would really save students.

A short-term freeze, they also note, would not address long-term problems such as rising health care costs that fuel the rising cost of a degree.

"The reality is that tuition freezes are not permanent," said Sandy Baum, a senior economist with the College Board, a national group that manages standardized testing and analyzes issues related to higher education. "If tuition is frozen one year, you're going to have to make up for it two or three years later."

Freshmen at the state's public universities today pay an average of $8,601 in tuition, an increase of $1,776 from what freshmen paid in tuition just three years ago.

In her State of the State address Tuesday, Granholm asked universities to freeze tuition in exchange for portions of any federal stimulus package and implied that those that don't could be penalized in state funding.

It wouldn't be the first time Michigan universities agreed to level tuition. In 2004, Granholm asked that universities boost tuition no more than the rate of inflation in exchange for stable state funding.

It didn't last. The state's budget destabilized. Tuition has continued to climb.

Nationwide, several universities and colleges have promised to freeze, or even cut, tuition.

On Jan. 28, Ohio Gov. Ted Strickland proposed a third year of what is perhaps the deepest tuition freeze in the nation. That's because it may continue for four years, with a few exceptions, and it involves all of Ohio's 13 public universities, 24 regional branch campuses and 23 community colleges.

It began in 2007, when Strickland increased the 2-year higher-education budget by $533 million in exchange for the freeze. It dovetailed with a plan to boost enrollment at Ohio's higher education institutions by 20% by 2017.

The state's promise to make up for the tuition freeze led to "an unprecedented level of trust between the governor and universities and community colleges," said Eric Fingerhut, chancellor of the Ohio system.

The level tuition has already lured at least one Michigander, Derek Moos, 18, of Dearborn Heights, to the Buckeye State.

Scholarships at the University of Toledo prompted him to tour its campus, a little more than an hour's drive from his home. Along with UT's programs, the tuition freeze "was definitely a consideration" in sealing the deal, said Moos, who now majors in finance there.

Still, there's a trade-off for predictability, experts warn.

Tuition freezes contribute to a feast-or-famine funding cycle for higher education that then is passed on to students, said Mark Kantrowitz of FinAid.org, a Web site to help families and students navigate college costs.

Once a freeze thaws, tuition rates whipsaw back through staggering hikes, he said. Even when a school locks in tuition for each class for several years, there can be significant increases between classes.

Central Michigan University, for example, launched its CMU Promise program in the 2005-06 school year. It guaranteed that each group of incoming students would be given a fixed tuition rate that would last up to 5 years.

But rising costs had to be borne by only that year's incoming students, leading to a 43% jump in the final two years. Citing uncertainty with state appropriations, school officials dropped the plan last year.

"Rather than applying that tuition increase to the entire student population, you apply it only to one class, to one-quarter of the population," Kantrowitz said.

Michigan college officials said they worry that a short-term freeze, based on a one-time stimulus package, doesn't address the more long-term problem of the rising costs of doing business -- rising health care costs and some of the lowest per-student state funding in the nation.

"You have to do things short-term, and you have to make cuts and you can make a bridge to cover some costs," said Lou Anna Simon, president of Michigan State University. "But it has to be a bridge to somewhere."

Contact ROBIN ERB at 313-222-2708 or rerb@freepress.com.