State bucks trend between financial, need-based aid offerings

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A recent study has found public universities decrease their tuition and fees when states increase merit-based financial aid, but increase them when states increase need-based financial aid.

However, Michigan seems to be an exception, a public university expert said.

Mike Boulus, executive director of the Presidents Council, State Universities of Michigan, said the cause of tuition rising for Michigan universities is due to the “incredible decline” of state support during the past several years, while the state has been suffering from an economic recession. Financial aid has not had an effect on tuition rates, he said.

“They didn’t study Michigan,” Boulus said.

The study, presented earlier this year at a conference of the Association for the Study of Higher Education, found increases in merit-based aid might decrease public university tuition because universities are competing for high-achieving students.

Boulus said MSU and all other public universities earn their revenues from a combination of tuition and state appropriations. When tuition increases, so does financial aid — especially need-based aid to help students that can’t afford to attend college otherwise, he said.

As for Michigan, the amount of financial aid distributed does not seem to have a direct effect on tuition rates, Boulus said.

For example, when the state stopped funding the Michigan Promise Scholarship, tuition rates did not go down, he said.

Val Meyers, associate director for the MSU Office of Financial Aid, deferred comment on the story to Boulus.

Economics professor Jeff Biddle said the study’s findings are sound based on economic theory. If the government offered low-income citizens a voucher for $100 to buy a car, car dealers would raise their prices to offset some of the increased demand for their product, he said. The same holds true for public university tuition.

“It won’t happen so much with merit-based aid because they’re not going to give it to so many people,” Biddle said.

He said the economic recession also has created an increased demand for public universities because it has made a college education look more attractive.

Public universities have benefited indirectly from the recession by students who have become unable to afford more expensive, private colleges, Biddle said.

“Students who before the recession would have preferred to go to a private college are now choosing MSU,” he said.

Social work sophomore Katherine Logan said she receives both merit-based and need-based financial aid from MSU, but she values merit-based aid more highly. Good grades should be the main reason a student is able to attend college, not what socioeconomic class they’re from, Logan said.

“Just because you’re poor doesn’t mean you should have a better chance to go to college than if you’re studying hard,” she said.

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