Tuition and Aid Board Recommendations for 2005-06
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Tuition rates and financial aid for Colorado undergraduates
Recommendations of the Tuition and Aid Board 2004-2005
Ric Porreca and Joe Neguse, co-chairs
May 2005
The Tuition and Aid Advisory Board (TAAB) advises the Chancellor on CU-Boulder tuition,
instructional and course fees, and financial aid. The TAAB is composed of student, parent, faculty, staff,
foundation, alumni, and community representatives, with co-chairs from the University of Colorado
Student Union (UCSU) and the Senior Vice Chancellor and Chief Financial Officer. TAAB is staffed by
the Office of Planning, Budget, and Analysis.
The advisory board was established in the "2004 Memo of Understanding re: Student Participation"
between UCSU Tri-Executives and Chancellor Richard Byyny, signed April 29 2004. It met
approximately monthly September 2004 to April 2005. Members are listed below.
Bill Kaempfer
David Frederick
Fred Denny
Richard Marsh
Eric Doepel
Kristin Keller
Joe Neguse
Naomi Lopez
Eugene Pearson.
Matthew Campagnoli
Ric Porreca
Erika Smith
Lou McClelland
Vice Provost of Academic Affairs for Budget
Associate Professor of Accounting, Leeds School of Business
Professor, Religious Studies
Parent Association
CU Foundation
Alumni Association Board
UCSU Tri-Exec- Co-chair
UCSU Speaker, Council of Colleges and Schools
UCSU Speaker, Legislative Council
UCSU Finance director
Senior VC and CFO - Co-chair
Budget Director, PBA, Staff
Director of Institutional Analysis, PBA, Staff
In 2004-2005 the Board focused on undergraduate tuition, primarily for Colorado residents. It aimed to
set in place a continuing discussion of tuition and aid needs, plus policies and principles to guide a
planned, systematic consideration of tuition and aid over multiple years.
The Board gathered information and considered policies in three areas: Revenue needs of the campus,
students’ full cost of attendance, and financial aid. Findings and recommended alternatives for tuition
and aid are summarized below.
The campus needs more money to pay for educating students.
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Peers spend on average over $5,000 more (32%) per student per year for educational costs
 UCB: $16,524, peers $21,796, FY2003 (latest year available)
 Source: IPEDS finance, expenditures excluding research and auxiliary (self-funded
operations)
 Peers: Selected by CU system: Large publics UC Berkeley, UC Santa Barbara, U
Connecticut, Florida State U, Indiana U, U of Kansas, U of Maryland, U of Massachusetts
Amherst, U of Nebraska, U of Texas Austin
We need to spend more to maintain and improve academic quality.
We have ongoing needs in physical infrastructure, the number of tenure-track faculty and other staff,
graduate education, and funds for financial aid.
 Enrollment has increased by 4,800 over the last 10 years, with little to no increase in faculty lines.
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Money for educating students comes from three main sources, with over 70% from tuition
and fees. Those sources are
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Fundraising, the endowment, and miscellaneous revenue, 14%
Tax dollars allocated by the State of Colorado (to come as COF stipends, fee for service, financial aid
allocation), 15%
Tuition and fees, 71%
Fundraising and other miscellaneous sources are increasing, but represent only 14% of
educational funds.
States play a role in funding educational costs, but State of Colorado funding is very low,
on a down trend, with virtually no prospect for increases in FY05-06.
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States fund both general educational costs and financial aid.
States benefit from a more educated citizenry with more civic involvement and better jobs that yield
higher tax revenues, from economic development, and from University social and cultural
contributions.
 This is called the “public benefit” of higher education.
 More: http://www.ihep.org/ The Investment Payoff: A 50-State Analysis of the Public and
Private Benefits of Higher Education
With recent cuts, CU-Boulder state funding per resident student has fallen to
 The lowest among public peers
 For FY04-05, the peer average is $10,936, UCB is $3,110 (71% below average), with Oregon
next-highest at over $4,500 or 145% of UCB’s.
 Peers are 23 public research universities reporting to a U of Virginia survey. No U of
California campuses reported.
 50% of the level in fiscal year 1990 (after Denver-Boulder CPI inflation adjustment)
 FY1990: $55.8 million for 14,743 resident FTE students, or $3,782 per student, which is
$6,193 in 2004-05 constant dollars
 FY2005: $56.5 million for 18,177 resident FTE students, or $3,110 per student
 xx Could add re pct of ed expenditures from state
Prospects for increases in state funding for FY05-06 are dim.
 COF vouchers will deliver funds to the campus in a different way, not increase funds.
 The legislature has concentrated on keeping higher education funds constant for 05-06 and on
forwarding a referendum to the voters to allow the State to retain tax dollars otherwise refunded
under TABOR.
Prospects for state funding for FY06-07 and beyond depend on whether Referendum C is passed in
November 2005. If it is, state funding may increase, though reaching the peer average in the
foreseeable future appears unlikely.
Students and families do and should play a role in funding educational costs.
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Students reap a “private benefit” from higher education through
 Higher lifetime earnings
 E.g., 2001 average earnings from employment of adults age 18 and over with bachelor’s
degrees was more than double the average for adults with a high school education only.
 Source http://www.postsecondary.org/last12/137EARNINGS.pdf
 A higher quality of social, cultural, and community life
 More at http://www.ihep.org/ The Investment Payoff: A 50-State Analysis of the Public and
Private Benefits of Higher Education, and at same site, paper on Arizona
 Four years of contacts, learning, and opportunities.
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Therefore higher education is a worthy investment for students and families.
The cost of attendance – the investment – is not just tuition.
 Rather, students attending college away from home must pay for tuition, fees, books, housing,
food, transportation, and personal expenses.
 This is called the total cost of attendance by financial aid officers.
Funding for this investment – for the total cost of attendance -- comes from four sources:
 Student work during the school year and in the summers
 A parent contribution from current income, savings, and perhaps loans
 Student borrowing, to be repaid from earnings after graduation
 Grants and scholarships -- financial aid – from the University, the State, the federal government,
and private sources.
With state funding limited and fundraising’s role relatively small, we must increase tuition
revenue to ensure academic quality and sustainability.
Tuition revenue comes from three sources, each with different realities and potential.
Graduate and professional students account for only 8% of tuition and fees, with limited
ability to increase revenue.
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8% represents tuition and fees after stipends and tuition remission for teaching and research
assistants.
Here our ability to increase revenue is limited because
 In-state MBA and Law students already pay $3,500 to $6,000 more per year than in-state
undergraduates. Even so, there is room for further increases to reach the peer average for both,
and further differential increases for these groups are planned. MBA and Law students represent
under 15% of all graduate/professional students.
 Revenue increases from PhD and academic master’s students are limited by our practice of
supporting many with teaching or research assistantship stipends and tuition subsidies. This is
standard practice nationally, necessary to maintain and increase the number and academic quality
of our students. The Graduate School and others are working to restructure Graduate School
tuition for fall 2006 and after to maintain, not increase, the net revenue graduate students now
generate and to enhance student numbers and academic quality.
Out-of-state undergraduates account for 67% of tuition, but our ability to increase revenue
from this source is severely limited by market realities and by statute. Furthermore, we
wish to reduce our financial dependence on this group, which represents under 30% of our
students.
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The proportion of students from out of state is limited by law both for freshmen (45%) and overall
(33%).
In a national market, our tuition/fees of $21,453 for AY040-05 are 17% or over $3,000 over the
average for our peers, and our share of the market is declining. We cannot hope to increase revenue
from this group with either increased numbers or increased tuition rates.
 Applications from out of state for freshman admission have dropped 27% in the last two years.
While factors other than tuition rates may have contributed to this drop, the primary factor is
almost certainly our high rates coupled with a recession.
 The top quarter of out of state freshman applicants admitted for fall 2005 have been offered a
Chancellor’s Achievement Scholarship worth $15,000 over four years. This new use of merit aid
is designed to increase the yield from this group of admits and to help retain them over four years.
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We plan to increase undergraduate non-resident tuition by 4.4% AY05-06, but then leave rates
unchanged through summer 2009 for all students enrolled as undergraduate non-residents in 0506. Rates would increase for students entering in 06-07.
 This program, announced April 2005, is designed to make tuition more predictable to out of
state families and make CU-Boulder a more attractive option for these students. However, it
does mean that the average tuition rate paid by out-of-state undergraduates in 2006-07 and
after will be lower than it would have been with “normal” year to year increases for all
students.
 Non-resident undergraduates enrolled in 05-06 who entered CU-Boulder in fall 2002 or
earlier will be offered financial aid to soften the move to this four-year guaranteed tuition rate
program. They will benefit from the guaranteed tuition plan less than entering students
because they have fewer terms left until graduation.
In-state undergraduates account for 25% of tuition revenue and offer the only viable
source of increased tuition revenue.
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Boulder in-state undergraduate tuition in AY040-5, $3,480 for Arts and Sciences full-time, is now
$2,142 or 33% under the peer average of $6,482 (without UCB)
 http://www.colorado.edu/pba/budget/peer/tui.htm and
http://www.colorado.edu/pba/budget/peer/AAUtuition.xls
 The peer average of $6,482 is for institutions whose state subsidy averages over $10,000 per
student. Ours is around $3,000 per student.
The peer average tuition at public universities reflects both the private value of an education at a
flagship public research university and the benefit of a state subsidy averaging over three times ours..
 The private value might best be estimated by the average sticker price paid by out of state
students at flagship public research universities. In AY04-05 this average (without UCB) was
over $18,000.
The Boulder in-state undergraduate rate is therefore well below the legitimate “sticker price,“ for
private value, which must range between $6,500 (public peer in-state average) and $18,000 (public
peer out-of-state average).
Tuition and fees represent only 26% of the expected total cost of attendance (COA) for Boulder instate undergraduates in 2004-05. The total COA for a full-time Arts and Sciences students is
$16,400, including tuition and fees, books, room and board, transportation, and personal expenses.
The COA is similar for students in residence halls and in private housing.
Tuition differentials for students in engineering, business, journalism, and music do not represent a
viable source of increased revenue because these students represent fewer than 30% of in-state
undergraduate enrollment. Ratesall.xls
Reference: Boulder tuition and fee rates, last 6 years:
http://www.colorado.edu/pba/budget/tui/tuition.html and FY04Revenue.xls.
The challenge is to increase in-state undergraduate tuition revenue enough to allow an
increase in per-student expenditures while
 Not letting the State of Colorado “off the hook” to increase funding
 Not hitting continuing students with too great an increase in total cost of attendance.
This might be regarded as a “bait and switch” because they are already counting on our low tuition
rates.
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Not hampering access for students from families that cannot afford to cover the cost of
attendance
Asking all students and their parents to make equitable, manageable contributions to
their total cost of attendance.
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A final goal with undergraduate in-state tuition is to remedy a “glitch” in the rate schedule
and more toward greater compatibility with COF stipend bases.
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For many years, all in-state undergraduates taking 9-18 credit hours have paid the “full time rate,”
while those taking fewer hours have paid a per-hour rate with a minimum of three hours.
In 2004-05 the full time rate was not the equivalent of 9 times the per-hour rate, but 8.3 times the perhour rate. This is due to historical legislative constraints on full-time tuition rates.
We would like to make the full-time rate exactly 9 times the per-hour rate. This would mean a higher
percentage increase for the full-time rate than for the per-hour rate.
91% of in-state undergraduates who are charged the full-time rate take 12-15 hours. Eventually we
would like to narrow the range of credit hours charged the full-time rate to 12-18 (or to 12 and higher)
and set the full-time rate at 12 times the per-hour rate.
COF (Colorado Opportunity Fund) stipends are set on a per-credit-hour basis. A tuition rate structure
with 1 to 11 hours at a per-hour rate, and 12-to-18 or 12-and-up at a full-time rate, complements the
COF stipend better than does the 9-18 full-time range now in effect.
 We do not recommend a rate schedule that is entirely per hour. A full-time rate encourages
higher credit loads (xx) and timely graduation, and most of our private competitors – universities
and liberal arts colleges alike – have full-time rates covering all students or students taking a
range of credit hour or course loads.
 A full-time rate also acknowledges that the costs of educating students include services such as
advising, curriculum planning and oversight, libraries, registration, counseling, and billing, with
costs that are not necessarily proportional to the number of credit hours a student takes in a term.
The size of the revenue increase needed requires extraordinary action, not incremental
change.
We recommend this extraordinary action now. We think now is the time because
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Both in-state tuition relative to peers and state funding per in-state student have deteriorated badly in
the last 3-5 years.
Enterprise status means that tuition revenue no longer counts against the TABOR limit. This is the
first year we are setting tuition with full assurance of enterprise status, so that an additional dollar of
tuition revenue does not mean reduced funding for some other state agency.
Only with an extraordinary tuition increase can we generate sufficient funds to maintain access for
students from Colorado families that cannot afford to cover the entire cost of attendance. A funding
model from the University of California provides the means of doing so.
The Board recognizes that we need time to build support for the extraordinary action we think is
warranted. Garnering support may take months or years – more time than is available for setting 2005-06
tuition. We set out a recommendation nevertheless, in hopes that we thereby will start the process of
gaining support and set direction for ongoing discussions of tuition and aid. This is labeled the
“Comprehensive Plan.” We do present alternative proposals as well, following the Comprehensive Plan.
The Comprehensive Plan
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Increase tuition sharply for 2005-06, with the rate for full-time Arts and Sciences in-state
undergraduates more than doubling, from $3,480 to xxx$8,000 per academic year. This is the rate
required to produce sufficient revenue to cover increases in operating costs, fully fund an enhanced
financial aid program, and allow some investment in quality improvements.
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Fix the glitch in the current tuition rate schedule, making the full-time rate equal to the perhour rate for the minimum number of credit hours covered by the full-time rate. The full-time rate
recommended reflects the “fixed” schedule.
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In 2006-07, 2007-08, and 2008-09, increase in-state undergraduate tuition only to
accommodate effects of inflation and changes in CU-Boulder’s state tax dollar
allocation per in-state student. This could mean a drop in tuition rates.
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Offer rebates through spring 2009 for in-state undergraduates enrolled before summer
2005 whose tuition increases are not covered by financial aid. The rebates would decline in
value each year, starting at $xx1500 in 2005-06. The rebates will soften the blow of higher than
planned rates for current students.
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Implement and fully fund a program of need-based financial aid based on the
University of California model, to ensure continued access to students from Colorado families
who cannot afford to cover the entire cost of attendance. This model is described in more detail
below.
The Comprehensive Plan emphasizes students’ total cost of attendance – tuition and other expenses and
financial aid. It raises sufficient revenue to xx. And it does so while meeting all the challenges set forth
above:
 Not letting the State of Colorado “off the hook” to increase funding
 Not hitting continuing students with too great an increase in total cost of attendance
 Not hampering access for students from families that cannot afford to cover the cost of attendance
 Asking all students and their parents to make equitable, manageable contributions to their total cost of
attendance.
The Comprehensive Plan relies on a financial aid model developed by the University of California, in use
for more than 10 years. The goal for undergraduates is that the cost of attending the University will be
met through a combination of
 a manageable contribution from family resources, based on the family's financial strength;
 a manageable contribution from the student in the form of loan and/or work; and
 grant support from a combination of federal, state, university, and private sources.
The University of California’s Education Financing Model
(http://www.ucop.edu/sas/sfs/programs_and_policies/efm/efmpiece.html) is based on the following
principles:
 total cost of attendance (tuition and fees, living and personal expenses, books and supplies, and
transportation) represents the context for the Model;
 a partnership among students, parents, federal and state governments, and the University is required
for the successful implementation of the Model;
 “equity of expectations” is needed across the entire undergraduate student body, so that all students
will be called upon to make some contribution toward their cost of attendance; and,
 flexibility is needed for students in deciding how to meet their expected contribution.
Under this Model, “all students will be called upon to make some contribution toward their [total] cost of
attendance.” All students, even the most needy, have a “work/loan expectation” comprised of
 The student work expectation; A manageable amount of work per week during the school year, more
in summer, where “manageable” means an average of 13 hours per week, consistent with steady
progress toward a degree
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This translates to a work expectation total of $4,200 per year, with about 45% from the school
year, 55% from summer (fulltime for 3 of 4 summers). The school-year work expectation of
$1,950 is less than the actual 2003-04 earnings of CU-Boulder in-state undergraduates with workstudy employment (about $2400).
 This verifies the assumption that students who work can and do work enough during the
academic year, at a high enough salary, to meet the expectation.
The student loan expectation: Debt levels designed to be manageable given the typical or expected
starting salary upon graduation. Here “manageable” means post-graduation repayment levels that are
7% of typical starting salaries, given 4.5 years of loan.
 This is within a credit industry standard range of 5 to 9%. Nellie Mae surveys indicate that
graduates do not regard repayment as a burden when up to 7% of gross monthly income is spent
on repayment. http://www.nelliemae.com/library/college_on_credit.html
 7% translates to student loans of about $4,700/year for 2004-05. This compares to an actual
average student loan of about the same amount, $4,700, for dependent CU-Boulder resident
undergraduates with financial need in 2003-04. Again, this verifies that the expectation is
realistic.
If the student wishes to work less than the expected amount, or the family/parents can or wish to
contribute less than the expected amount per federal calculation, the student may borrow more. The
parents may also borrow to cover their share.
Thus the model does not seek to limit actual debt at graduation, or to cover the total cost of attendance
debt free, for any students. Instead it attempts to cover total cost of attendance for all students with the
combination of expected parent contribution, student work, student debt, and grants, allowing the student
to borrow more to cover the work expectation and/or the expected parent contribution.
We like the University of California model because it
 uses objective data to set the student work expectation, the student loan expectation, and the family
contribution;
 bases the family contribution on standard federal calculations;
 emphasizes the “equity of expectations” for work and debt across all students;
 utilizes the capacity of students to secure subsidized loans;
 explicitly considers students and their post-graduation earnings as players in the partnership that pays
for higher education;
 has been in use since the early ‘90’s, so is tried and tested at the research university system with the
best record of attracting low income students.
The University of California provides gift or grant aid to cover the portion of the cost of attendance not
covered by the combination of the expected parent contribution, earnings from the student work
expectation of 13 hours per week of work during the academic year, student loans such that repayment is
roughly 7% of typical starting salaries, and gift or grant aid from other sources.
With its current resources CU-Boulder cannot provide that level of gift or grant aid. To do so we need to
increase tuition as in the Comprehensive Plan and allocate xx almost 40% of the increased revenue to
financial aid. If this is done, students from families with adjusted gross incomes of roughly $60,000 and
below would see little or no increase in expenses to be covered by parents, student work, and student
loans combined, even given a doubling of tuition. Circumstances for individuals depend on more than
parent AGI, on factors including household size, non-taxable assets, and xxx.
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Alternatives to the Comprehensive Plan
The Comprehensive Plan is preferable to a similar tuition increase phased over several
years.
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A phase-in would take a long time to achieve the required tuition rate -- nine successive increases of
10% each, or three successive increases of 33% each.
In contrast, out revenue needs, our low state funding per student, and our low in-state tuition rates are
all true right now.
The planned aid program could not be implemented fully until late in a phase-in period.
Even phased plans approved by all parties are subject to later withdrawal of approval. The CU
System, Regents, CCHE staff and commissioners, JBC, legislature, and governor all play a role in
approving tuition changes, and none of these parties has continuity over a nine or even three year
period. Counting on continuing approval of a phase-in plan is therefore risky.
Phased in increases are designed to soften effects on students and families who have planned on low
tuition. The recommended program of rebates for continuing students whose tuition increases are not
covered by financial aid accomplishes this goal as well as a phase-in.
Xx 28% , 20% to aid Gold?
Xx 11%, 20% to aid. Silver?
Xx inflation only .
Effects on
 Student COA not covered by grant/gift
 U spending/quality
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