Reven-U: Funding Higher Education

Tuition Timeline
A coming lesson in price elasticity of demand.

Economics homework assignment: As Florida public universities jack up tuition by 15% per year, how long before price-anxious students switch to state colleges or private universities? State college degrees are cheaper; you can live at home. Private universities argue that they offer superior quality and can have such generous aid that they can be price-competitive.

In 2007, the Legislature freed public universities to raise tuition up to 15% per year until they hit the national average. At Florida Trend's request, the Board of Governors calculated that will take nine years. (This assumes 15% annual increases in Florida tuition and 5% increases in fees and 7.1% annual increases in the national average — the average for the last five years.)

So come 2019-20, today's Florida third-graders could be spending exactly the same as the projected national average of $14,100 — a 189% increase from the past year.

Florida administrators, pointing to rising applicant numbers and quality, say there's no sign of higher tuition driving off students. They say they're sensitive to the impact of 15% annual increases but argue the current base is so low — 48th nationally — that there's plenty of headroom.

"The cost of a Florida education is still a huge bargain," says University of North Florida provost Mark Workman.

All schools likely won't arrive at the national average simultaneously. Most expect the schools most in demand — UF and FSU, for example — to increase tuition by the maximum allowable percentage each year until they reach the national average. Smaller schools likely will get there more slowly, finding resistance from prospective students.

Administrators also anticipate other impacts beyond their top lines. "As students and their parents pay higher tuition, the expectation of services and support rise significantly because they see themselves more as customers and consumers rather than students subsidized by the state," says University of South Florida provost Ralph Wilcox. "That's a phenomenon public universities are going to have to deal with."

Tags: Education