High-Net Price Public Universities

The humble beginnings of Temple University seem almost too good to be true. A young working-class man in 1884 asked Russell Conwell, a Philadelphia Baptist minister, traveling lecturer, and a bit of an entertainer, to tutor him at night, and soon Conwell was holding night classes for dozens of others. A few years later, he received a charter from the state to transform his classes into “Temple College.”¹ From then on, the university dedicated itself to educating local working-class students so they could go into professions that would help propel them up the income scale.²

Temple “has educated Philly’s middle-class backbone—dentists, nurses, teachers—for generations,” Philadelphia Magazine reported in 2014, adding that “one in seven area college grads is a Temple alum.”³

So given that background, why does Temple ask the lowest-income, in-state freshmen to pay an average net price that equals more than half of their families’ yearly earnings? In 2015–16, these students were left on the hook for $16,638. Only 20 other public colleges and universities charged more.⁴

Severe state budget cuts are part of the reason, as well as the fact that Temple has a modest endowment.⁵ But much of the blame goes to university officials and board members who became obsessed with rising up the U.S. News & World Report rankings and making the former commuter campus more prestigious. As part of that effort, the university designed a non-need-based aid program that was so generous it threw the school into a huge deficit and caused an uproar on campus that ended up costing both the president and the provost their jobs.

Temple is one of 305 public colleges and universities that charged the lowest-income, in-state freshmen an average net price of $10,000 or more in 2015-16. Of these schools, 49, including Temple, required these students to come up with $15,000 or more.

Source: The above data are from the Department of Education. This is only a selection of schools in the category.

The overall group of 305 schools includes 30 public flagship universities. For the lowest-income students, the five most expensive flagship campuses are Penn State University ($20,873), the University of Alabama ($18,686), the University of New Hampshire ($16,750), the University of Colorado at Boulder ($15,109), and the University of Kansas ($14,760).

The group also includes major public research universities, such as the University of Pittsburgh ($21,581), Oregon State University ($16,102), the University of Cincinnati ($15,768), Auburn University ($15,591), George Mason University ($15,089), the College of Charleston ($13,818), and Clemson University ($12,905).

Many of these schools are active participants in the merit-aid arms race. But none of them managed their non-need-based aid program as poorly as Temple University did, or had so much turmoil surrounding it.

From the outside, it’s hard to tell how much blame goes to former president Neil Theobald or former provost Hai-Lung Dai or the university’s board. But what is clear is that they had a goal, as was highlighted on the Office of the Provost’s website, of boosting the school’s reputation by obtaining a top 100 U.S. News ranking for national universities. And they put in place policies to help them get there, including trying to attract higher-achieving students.⁶

To do so, they created an extremely generous non-need-based aid program that provided automatic scholarships that were tied to students’ GPA and SAT scores. To get the minimum scholarship in the fall of 2016, students had to have at least a B average in high school and get an 1150 out of 1600 SAT score.⁷ Those with higher grades and test scores automatically got larger scholarships.

The program grew quickly. In 2015–16, Temple spent about $62 million, or two-thirds of its institutional aid budget, on non-need-based aid. That amount was almost 10 times more than it spent a decade earlier, when merit aid made up a little more than one-fifth of the school’s aid budget.⁸ The heavy spending on this program took a toll on low-income students. The average amount of financial need that the university covered plummeted to 69 percent in 2015–16, a drop of 19 percentage points from 10 years earlier.⁹

The non-need-based aid program, as well as other changes the university made, appeared at first to have the desired effect. From 2012 to 2016, Temple rose 17 spots in the U.S. News national university rankings, to 115, one of the biggest jumps in the category during that period of time.¹⁰ Explaining the rise in a campus publication in 2016, Jodi Levine Laufgraben, vice provost for academic affairs, assessment and institutional research, said, “We’ve improved in a number of key indicators that U.S. News uses to calculate the rankings: faculty resources, financial resources, graduation rate, student selectivity and more.”¹¹

But the automatic nature of the scholarship program came back to bite the university. Too many incoming students were receiving the awards, even after university officials raised the standards. Over 700 students qualified for the scholarships for the fall of 2016, putting the school $22 million in the red.¹² When the news became public in June of that year, Theobald shocked the campus by firing Dai. A week later, the board’s leaders, who had been close to the provost, demanded Theobald’s resignation, arguing that the president had been fully aware that the shortfall was coming.¹³

Too many incoming students were receiving the awards, even after university officials raised the standards.

Some at the university hoped that the shake-up would force university officials and the board to reexamine their priorities. “Everybody sort of likes the idea of moving up in the rankings and all that good stuff, but we are doing so perhaps at the cost of serving the population that we’ve traditionally said we’re supposed to serving,” Michael Sachs, the then-president of Temple’s Faculty Senate, said in an interview with the Philadelphia Inquirer. “Are we just bringing in these high-profile researchers and all these better students and losing a sense of our mission to serve first-generation students, etc.?”¹⁴

In response to the $22 million deficit, Temple officials scaled back the non-need-based aid program a bit. They limited the number of scholarships they will give out, meaning that some students who have the required grades and test scores will no longer automatically receive the aid. And they decided to be less aggressive in marketing it.¹⁵

But despite the hopes of faculty members like Sachs, Temple officials didn’t give up their focus on rankings. And once again, the university’s hunger to move up the pecking order led to a scandal that rocked the campus. This summer, the university admitted to U.S. News that the head of its business school had sent the publication fabricated data about more than half a dozen programs to artificially inflate the school’s rankings.¹⁶ In response, U.S. News has at least temporarily stopped ranking the business school.¹⁷

The news overall hasn’t been all bad for the university though. In September, U.S. News moved Temple up nine more spots in the national university ranking, tying it with eight other schools at 106.

Meanwhile, according to preliminary Education Department data, the average net price for the lowest-income students shot up even higher in 2016–17, to more than $18,000.

Public flagship and research universities are not the only institutions making significant investments in non-need-based aid and charging the lowest-income students a high average net price. State regional colleges are increasingly participating in the merit-aid arms race as well.

Western Michigan University, for example, spent nearly $12 million, or about one-third of its $37 million institutional aid budget, on non-need-based aid in 2015–16. That year, 22 percent of freshmen received merit scholarships, averaging $5,127 each.¹⁸

With a steep reduction in the supply of high school graduates in Michigan and intense competition among colleges in the state for this shrinking pool of students, Western Michigan has been struggling. Enrollment has dropped year after year since it reached a high of about 25,000 in 2002–03.¹⁹

“Everybody sort of likes the idea of moving up in the rankings and all that good stuff, but we are doing so perhaps at the cost of serving the population that we’ve traditionally said we’re supposed to serving.”

Edward Montgomery, who became the university’s president last year, has vowed to turn things around by more aggressively pursuing out-of-state students.²⁰ Last year, students from other states made up about 9 percent of the student body. University officials would like to increase the share to 30 percent over the next several years.²¹

To achieve this goal, the school has slashed tuition and fees for out-of-state students nearly in half to under $15,000.²² Meanwhile, the school is continuing to provide generous scholarships tied to students’ GPA and test scores. The scholarships are not automatic, however. The school chooses among applicants for the awards.

“For us to grow, we have got to improve the number of out-of-state students at this institution,” Terrence Curran, the associate provost for enrollment management, told the Kalamazoo News in December. “That’s the only option…There is no way we’re going to be able to grow with the demographics in Michigan.”²³

Western Michigan’s desire to more than triple the share of out-of-state students on campus probably doesn’t bode well for the lowest-income, in-state students, who already pay an average net price of $12,453.