Nonresident Student Enrollments and Their Growing Role in Paying for Public Higher Education

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WICHE Policy Analysis and Research

As states and postsecondary institutions confront ongoing concerns about their fiscal health after a brief post-recession respite, colleges and universities across the nation are once again making their recruitment pitches to prospective students. Increasingly, public institutions are aiming these appeals well beyond their home states’ borders, in part because nonresidents (including international students) typically pay significantly more tuition than resident students. Although this has always been true, two converging pressures are giving colleges far stronger incentives to attempt to attract those students: changing demographics that have produced a stagnant or shrinking pool of traditional-age student populations, and the rising importance and predictability of tuition revenue relative to recent patterns of declining per-student state appropriations. As recruitment of nonresident students intensifies, policymakers have devoted considerable attention to the relative proportion of nonresidents in universities’ entering classes, especially the most selective flagships where concerns over the possible crowding-out of residents are paramount. But in spite of a growing awareness of how important nonresident tuition payments are to institutional bottom-line funding, there is little attention given to out-of-state tuition in finance policy. So it is unsurprising that there is not much information available to policymakers to help them better understand just how important residency is in the funds that institutions derive from tuition. This Policy Insights reports on the results of a brief survey of Western Interstate Commission for Higher Education (WICHE) states that attempted to gather data on tuition revenue broken out by students’ residency. The survey revealed that few state higher education executive offices in the West have the data necessary for this analysis. Among states that were able to respond, it is evident that nonresidents are an increasingly vital source of unrestricted revenue for some institutions’ operations. This suggests that better information about the sources of tuition revenue can lead to a more complete understanding of institutional funding. That more complete picture can ultimately better inform dialogue that fits with the principle of recognizing all three primary sources of financial support for higher education – appropriations, tuition, and financial aid (ATFA) – as a single set of interrelated tools, rather than as a disconnected set of policy levers. Residency, in the context of ATFA, is an important element to consider as policymakers attempt to find ways to preserve or improve college affordability.