Tuition Capping and Freezing: Rain Check for Future Price Increases or Durable Policy Solution?

Postsecondary & Workforce

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Last month, we released a 50-State Comparison of tuition-setting policies showing that, in the majority of states, legislatures grant authority to individual or system-level boards to set tuition for public higher education. However, even when state legislatures do not set tuition rates, several still impose restrictions on tuition prices through enacting tuition capping or freezing policies. We found that restrictions are in place for the four-year public sector in 11 states, and, for the two-year public sector, in 10 states. To be clear, we only include state laws that mandate a cap or freeze of tuition — not individual institutions or systems that have created their own cap or freeze policies. And, the majority of cap or freeze policies across the country are created by institutions or systems themselves, not by legislatures.

A quick internet search points to institutions of all types and sizes that have halted tuition growth for 2020-21: the University of Nebraska, Temple University, Michigan State University and James Madison University, just to name a few. Nationally, it appears that postsecondary institutions most frequently draft their own methods for holding the line on tuition growth.

In some instances, state lawmakers and higher education leaders have collaboratively developed methods to slow tuition growth. Take, for example, the state of Washington, where the tradeoff between tuition revenue and state appropriations was addressed head-on: A 2015 policy provided state support to replace tuition revenue and restrict further tuition growth.

While tuition caps and freezes may sound like a straightforward solution to affordability woes, the reality of the policies is much more complex — especially in light of the coronavirus pandemic. The process of setting tuition prices depends on what sources of revenue the institution can count on: chiefly current and future enrollment and the tuition generated by those students, followed by state appropriations and state financial aid programs.

Postsecondary institutions are largely struggling to understand what the impacts of the pandemic will be on upcoming enrollment. At the same time, states have historically shown a preference for cuts to general higher education appropriations during economic downturns. The convergence of uncertain enrollment numbers, increased financial need and potential cuts to state budgets means that institutions may not have all of the information they need to understand the longer-term revenue implications of a tuition freeze or cap. As states, systems or institutions consider the immediate need of alleviating student and family financial burden with a cap or freeze on tuition, it is important to also consider the potential long-term effects.

Research pointing to risks associated with capping and freezing, such as actually increasing costs for students over time, can get lost in the mix. Data from Illinois demonstrate that the long-term implication of tuition freezes can be larger increases in tuition, leading to higher out-of-pocket costs for students over time and even less cost predictability. As state leaders consider the possibility of imposing restrictions on tuition growth, or of encouraging caps in order to garner other tradeoffs from institutions, they might consider the potential short-term benefits against the long-term costs.

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Senior Policy Analyst at Education Commission of the States | spingel@ecs.org

Sarah supports the research and analytical capacity of the policy team in her role as a senior policy analyst at Education Commission of the States. Sarah has extensive experience in student financial aid programs, and is frequently called upon as an expert in state financial aid policy and practice. A recipient of state aid herself, Sarah believes that state policy leaders have a key role to play in ensuring affordable postsecondary opportunities for students from all backgrounds.

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Policy Researcher at Education Commission of the States | sbroom@ecs.org

As a policy researcher, Shaniqué works on tracking legislation, answering information requests and contributing to a variety of policy reports and data visualizations. Prior to joining Education Commission of the States, Shaniqué began her pursuit of a doctoral degree in higher education from the University of Denver with special interest in exploring funding inequities for historically black colleges and universities. Shaniqué also has a passion for identity development and student support and retention services, and she is dedicated to addressing issues of access and equity in postsecondary institutions.

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