Tuition freezes are gaining popularity across the country. Earlier this year, university systems in Virginia and Pennsylvania announced tuition would not rise in the next academic year, saving students and parents millions.
Purdue University started the tuition-freeze trend in 2013. Under the leadership of its president, Mitch Daniels, Purdue instituted a freeze on all tuition and fees at its flagship campus in West Lafayette, Indiana. Tuition has stayed flat since — more than half a decade. Since then, enrollment has increased, students have a more affordable education, and Purdue continues to thrive.
University administrators, governing boards, and state lawmakers can learn a lot from Purdue’s success.
A closer look at the data reveals important lessons for policymakers who want to replicate Daniels’ success.
Lesson 1: Revenue and expenses both play a role
To hold the line on tuition, Daniels increased revenue from other sources while cutting wasteful spending. Many of Daniels’ cost-cutting measures have been well-publicized. In 2016, the Martin Center reported:
The changes range from the mundane, such as selling off 10 of its automobiles, to the path-breaking, such as forgone merit increases by all personnel at high administrative levels.
Daniels plus his deans, executive vice presidents, vice presidents, vice provosts, and other officers of equivalent level will not get merit increases this year.
Purdue’s per-student costs reveal these small changes have added up. In his first two years at Purdue, Daniels cut the budget by $40 million. After accounting for inflation, Purdue’s per-student expenses fell in almost every category, including those that generally fall under “administration:” academic support, institutional support, and student service.
At the same time, Daniels increased revenue from out-of-state tuition and fees, private fundraising, and other sources.
Purdue’s tuition revenue per student increased modestly from 2012 to 2017, despite the freeze. That’s partially because the number of foreign and out-of-state students increased.
And Purdue has pushed back against the criticism that it is neglecting Indiana students. Inside Higher Ed reported in 2018:
The university maintains that a more accurate way to look at Purdue’s demographics … is to analyze the recent freshman class, which included 627 more Indiana students than in 2013, despite the fact Indiana’s high school graduating class has remained fairly flat.
A much more significant contributor to Purdue’s increased revenue has been private fundraising. This year, Purdue’s Day of Giving raised $41.6 million. That amount set the fifth-straight record for a 24-hour higher education fundraising campaign. The value of the Purdue system’s endowment now stands at more than $2.5 billion — up from $2 billion in 2012.
Lesson 2: Additional appropriations aren’t required
In May, Virginia public colleges announced their own tuition freeze. And while it’s certain to help many students and parents who pay the bills, the costs will be borne by Virginia’s taxpayers. The freeze was a result of $57.5 million of “incentivized funding” in the state budget for colleges to freeze their tuition for in-state students.
Purdue managed its tuition freeze without additional state funds. That’s despite the fact —as universities go — Purdue was lean even before Mitch Daniels arrived. Now, it spends significantly less than its peers.
Nationally, public universities receive 28% of their core operating revenue from the legislature. For Purdue, it’s less than 20%. And during the freeze, Purdue’s revenue from state and local appropriations decreased: from $8,267 (inflation-adjusted) to $7,551 per student.
A typical large, high-research land-grant university allocates its money differently. For example, N.C. State spent $42,982 per student in 2017 — almost $5,000 more than Purdue. Of that amount, just $16,772 went to instruction. It also spent more on student services, institutional support, public service, research, and academic support.
Lesson 3: Cutting the budget doesn’t mean cutting quality
Throughout the changes, Purdue has maintained its academic quality. Since the tuition freeze and budget cuts, student retention rates have held steady. Just 55.9% of students who began at Purdue in 2012 graduated within four years. For students who began in 2014, that figure rose to 60.3%.
“This place was not built to be efficient,” Daniels told The Wall Street Journal. But “you’re not going to find many places where you just take a cleaver and hack off a big piece of fat. Just like a cow, it’s marbled through the whole enterprise.”
In Daniels’ first two years at Purdue, he gave faculty members raises and increased the school’s minimum wage to $10 per hour. Instruction expenses increased from $15,605 to $19,065. Daniels was careful to improve the school’s core instructional functions while cutting auxiliary and administrative expenses.
These lessons can help university administrators, governing boards, and state lawmakers across the country to replicate Daniels’ success. Using Daniels’ methods, it’s possible to freeze tuition and cut costs, improving the value of public higher education to students and taxpayers.
Jenna A. Robinson is president of the James G. Martin Center for Academic Renewal.