Out-of-State Admissions to State Universities

Glenn Reynolds points us to an article by Steve Cohen in the Daily Beast on increasing numbers of out-of-state students accepted at state universities.  The reason for this is collecting full-fare out-of-state tuition dollars by cash strapped public universities.  (In every place I’m aware of, and as a parent of a DC child just starting as a freshman at Rice University, I am very aware, the old strategy of attend somewhere for a year and then get resident tuition doesn’t work anymore – whatever the residency rules for other things, generally a student will be an out-of-stater for the full four years.)

Cohen particularly focuses on UCLA and UC Berkeley as examples of the new trend in college admissions:

Even colleges that shunned out-of-state students for years are showing a marked receptivity. The University of California’s top campuses—Berkeley and UCLA—have doubled and even tripled their rosters of out-of-state kids. At UCLA, the total percentage of out-of-state kids is still relatively low: only about 7 percent of last year’s entering class. But at Berkeley, it was a whopping 19 percent and will grow to 20 percent this year, according to Janet Gilmore, a university spokesperson. Five years ago, the percentage of out-of-state students at Berkeley was a mere 5 percent.

At most of these world-class universities, admission is still very selective. The acceptance rate for out-of-state students at UCLA was only 30 percent last year. But that was still better than what California residents experienced, which was a 21 percent acceptance rate. And it even got a tad easier for out-of-staters compared with previous years. Five years ago, out-of-staters applying to UCLA were admitted only 21 percent of the time, compared with their California counterparts, who saw a 23 percent admit rate.

My daughter was a beneficiary of this; she was accepted to both.  I would not have thought she was competitive for either place as a pure out-of-stater even a few years ago.  (It probably helps that very few private school kids in DC seem to apply to either UCLA or Cal; my daughter’s friends at Sidwell Friends, National Cathedral School, and St. Albans, where my wife teaches, went en masse to Michigan, but very few of them apply to the University of California.)  When we visited the two UC schools, the admissions people were explicit in saying they were looking for out-of-state and international admissions, partly to keep their reputations up but mostly for the money.

As an out-of-state parent, of course, I like this.  And DC is something of a special case, being both tiny in population and having no public university (I’m not counting the University of District Columbia, which is something closer to a community college) of its own.  Looking at it from the perspective of the state’s own residents, I think it’s a terrible deal, and if I were a state legislature, I would set strict limits on the percentages of out-of-state and international students that could be admitted, and the larger the pool of highly qualified applicants – California or Texas are pretty easy cases – the less reason to admit non-residents.

The problem is a classic public choice problem.  (Side-note:  This problem is quite apart from a different problem, something quite crazy from a policy standpoint.  At the moment when parents find it hardest to fund their children’s education at private universities, in the midst of a serious downturn, the loss of tax revenues pushes down funding to public universities and lowers their quality and ability even to put on classes.  Yet this is ideally the moment when public universities should be able to act counter-cyclically and sweep up the best students at state-university rates, both improving their reputations – and building the state’s economy into the future.  But no.  Leave that aside.)

The public university faces a serious crunch in state funding.  It seeks to respond by bringing in more out-of-state and international students who will pay its full tuition cost; each of those students is much more valuable than an in-state student, no matter how well-qualified.  Anyway, if you have all of China to choose from, you can always find someone who will fit the bill, both intellectually and financially.  But the out-of-state tuition does not really cover the subsidized fully internalized cost of the public university to that state’s public.  That’s so in a direct sense, in terms of direct subsidies, and if one counts the capitalized costs of past subsidies, often over a century or more.  And the even more indirect, but still important, costs of community, alumni, and other goodwill (including the very expectation and promise of long term state funding – the effect of which is to give others the confidence to contribute, donate, and help build the institution over the long term), then the fully internalized cost would be far higher still.

The university has little incentive to charge that cost; all that matters to it is something over the current in-state tuition cost that the out-of-state traffic will bear.  In the face of demand from in-state students, however, this is a bad policy for the state and its residents – its community, which was, after all, the reason why the state subsidized the damn thing in the first place – even as it is good policy for the university.

To which one can say, well, the problem here is to raise the tuition price to fully capture to cost, and then let the university choose.  But that’s a good policy only if one assumes that a public university, founded by a state for the benefit of its society and economy, should be indifferent as to the members of that political community.  Which is to say, those that live there and lived there in the expectation of having some shot at attending the institution, and having a priority in that institution, as opposed to anywhere else.  I realize that many at public universities  (particularly the most elite that regard themselves as islands of cosmopolitan universalism in a sea of narrow and parochial people who regard being a resident – residing – living in a place for the long term) see such expectations related to actual place and actual community as precisely the problem.  But I don’t see that state legislatures, who presumably – even in California – are supposed to have some connection to place and resident community, should see it that way.

Price alone won’t do it, so long as the number of physical places is limited at the most elite schools.  That being the case, were I a state legislator in California, I would support very strictly limiting the ability of public universities to make decisions that are good for the university and bad for the state and its residents.  But in that case, be prepared for the loud and sententious backlash; the first rule of university relations with the wider world is that there is no policy in the financial self-interest of a university that will not be declared to be in accordance with Universal Virtue and the Greater Public Interest.  The University wants more money from a wider and higher paying pool; poof: it announces that its mission is to offer its services to the Global Community and to Men & Women Everywhere.  At whatever the global traffic will bear.

(My goodness, higher education is such a racket.  And such a self-regarding and self-righteous one!)

Update: Thanks for some very good and thoughtful comments.  I want to bring my response to a couple of them up into the post:

A couple of quick thoughts on the quality and money issue …

First, the university has a serious conflict of interest on each of the questions of more money and more talent. The post addresses mostly the question of money – the university will ordinarily have reasons to raise direct revenues for itself even if it comes along with an indirect subsidy. In the case of talent, in the market for university reputation, out of state is fine with the university as it has no stake as such in the fortunes of the state itself.

With respect to either of those, there’s no reason to believe that the university has the best interests of the state at heart, and good reason to think that its interests conflict with those of the state and its residents. Moreover, the questions here ultimately run to the net, long term welfare of the state as a political and social community, and there is little reason to believe that the university is able to make those judgments; those kinds of decisions, through budgetary processes and state mandates, are exactly the kinds of large scale social tradeoffs that legislatures exist to mediate.

There are important factual and value judgments that have to be made about various aspects of this. One is how much to trade off the hope that out of state talent will remain in state – this is frankcross’s point – if given a valuable place at the university. Another is the quality – not just reputation, but quality – of a complex and interlinked research university across many fields – and how much that is connected with undergraduate admissions from in-state and out of state and internationally. Another is the value to be assigned to having some amount of the student body from someplace else.

Those are all complicated tradeoffs and assessments; they do not seem to me to be specially within the governance of a university that depends for so much upon the larger state budget and its taxpayers, now and in the past, and particularly given the conflicts for the university’s interests. I think there is no simple answer to any of this. The enormous value to the wealth of California as a state owed over a hundred and more years to the investments in its three tier university system are staggering, and that is so despite the current difficulties in the state. But it seems to me equally that the interests of its higher education system have been diverging from the interests of the state’s residents and society more broadly in many, many ways. And will continue to do so for the foreseeable future.