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UC education: Cadillac product, Chevy price

by Dean Henry Brady

In an overheated article (“UC Fails to Hit In-State Goal on Admissions”), the San Francisco Chronicle scolds UC for appearing to decline $25 million offered by the Legislature to admit 5,000 more in-state students this year. That’s $5,000 per student which would supplement the $15,000 in tuition and fees that UC charges each student — although many low- and middle-income students get substantial discounts. State support is needed because tuition does not cover the entire cost of a UC education. That’s not surprising, given that Stanford and the University of Southern California charge over $45,000 per year.

The Chronicle implies that UC foolishly left money on the table. Not so.

If this is such a great deal, why aren’t comparable private institutions like Stanford, across the bay from Berkeley, and USC, across the town from UCLA in Los Angeles, clamoring for something similar? Why aren’t they pleading to take $5,000 from the state and, in exchange, charge $15,000 in tuition and fees for additional students? After all, conventional wisdom is that the private sector is more efficient than the public sector. If this is a good deal for UC, shouldn’t it be a spectacular one for private universities?

Moreover, since USC and Stanford have around 45 percent in-state students, the state of California would benefit from them admitting more California students so they could move towards UC’s current percentage of nearly 90 percent California students. Of course, they would have to reduce their current tuitions so students would not pay more as part of this deal.

Efficiency in action

The simple truth is this: Stanford and USC would never take on students for $5,000 per student if they had to cap tuition at $15,000. They probably wouldn’t take new students for a subsidy of $20,000 per student under these conditions.

Another basic fact is that UC is so much more efficient at providing high-quality, world-class education that neither Stanford nor USC can compete on the basis of costs. UC provides students in California with a Cadillac product at a Chevy price, and the Legislature should be proud of that.

But the current deal it is offering makes no sense. An offer of $10,000 per student might work, but it is embarrassing that the Legislature thinks that the UCs could continue to provide the same product with state support equal to the price of a Vespa motorcycle. The hard-working, high-achieving students who go to the UCs —many more of whom are low-income than those who go to USC or Stanford — deserve the high-quality education offered by Berkeley, UCLA, Santa Barbara, Davis, Santa Cruz and the other UCs. The Legislature should not be in the business of reducing the quality of a UC education by offering ridiculously low incentives for the university to add more students.

Private universities, public subsidies

The problem and inequity go even deeper. Recent research has shown that, surprisingly and paradoxically, many rich, private universities get substantially more public subsidy per student than similar public universities, because of philanthropic deductions and untaxed endowments. These tax expenditures allow rich, private universities to get enormous public subsidies – greater than comparable public universities on a per-student basis – and public universities like UC are then criticized for not doing better when they already provide a premium product cost-effectively and at a price way below the private competition.

Let’s get real. The University of California does a magnificent job with minimal resources. It is a road to opportunity for California students and an engine of economic growth for the state’s economy. Let’s fund it at a level that makes sense, instead of fantasizing that we can get something for almost nothing.

UC President Napolitano has expressed her desire to increase California enrollment and has pledged to try to work with the Legislature. But she should probably walk away from this unsatisfactory deal. After all, how does it help California students to agree to water down the quality of their education? The Legislature should come up with something more sensible.

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Henry Brady is currently the Dean of the Goldman School of Public Policy.

This article was originally posted on The Berkeley Blog.