Students Subsidizing Classmates through Tuition Set-Asides

January 15, 2014

Increasing numbers of middle-income students are subsidizing their classmates' education, says the Wall Street Journal.

A Wall Street Journal study found that student need-based subsidies have skyrocketed by 174 percent at a dozen flagship state universities.

  • In the 2012-2013 year, students transferred $512,401,435 of their tuition to their needy peers. That is an increase from a level of $186,960,962 in the 2005-2006 school year.
  • Private schools with small endowments may see more than half of tuition set aside for financial-aid scholarships. In public schools, that figure ranges between 5 percent and 40 percent.
  • School administrators say that the rise in subsidies is due to cuts in state aid.

It is difficult to calculate exactly how much each student subsidizes another, because there is very little transparency in university balance sheets. However, 13 state universities do list the full amount that students pay in tuition set-asides:

  • At the University of Washington last year, a full-time, in-state tuition student paid $2,200 in subsidies. In 2006, that student would have paid $540 in subsidies.
  • At the University of North Carolina, set-asides have tripled from $535 in 2006 to $1,724 in 2012.
  • In California, tuition set-asides make up 28 percent of tuition, at a total of $601 million last year across the entire University of California system.

When Iowa residents learned of the tuition set-aside program in their state, the huge backlash prompted the Board of Regents to end the practice in 2012.

Source: Douglas Belkin, "More Students Subsidize Classmates' Tuition," Wall Street Journal, January 9, 2014.

 

Browse more articles on Education Issues