Is the University of California Wrong For Admitting More Non-Californians?

As the fall semester approaches and college freshmen prepare to start school, there is renewed criticism of the University of California's decision, implemented over the last few years at all or nearly all of the system's campuses, to increase the number and percentage of out-of-state and international college students. The harshest criticism comes from those California students (and their parents) who are finding it increasingly hard to be admitted to UC campuses, especially the most competitive ones like UC Berkeley. Many of these students and parents worry that the University system, motivated by a desire to obtain out-of-state tuition monies, is admitting lesser qualified people from outside California in such a way as to displace more highly qualified California applicants who otherwise might be admitted. Critics feel this is a betrayal of the University's basic purpose, which is to serve the needs of the State. After all, it was California citizens and taxpayers who created the UC and built it up into the best public higher education system in the world. In the space below, I try to debunk some of the myths and misstatements concerning this controversy, and to shed light on the crux of the problem.

The Factual Realities and Myths Underlying the Criticism

Let us begin with the basic factual claims critics often make. Some of these assertions are verifiably true. It is certainly the case that the UC seems intent on yielding more out-of-state and international undergraduate students at its campuses than it did years ago. For example, the system (according to reports in the Los Angeles Times and the San Francisco Chronicle) admitted around 3,000 more out-of-state freshmen in 2014 than in 2013, and in 2013 the number was higher than in 2012 by about another 1,000. Moreover, even as the number of admittees from outside the State is increasing, the number of admitted applicants who come from within California is holding steady or, at many campuses, dropping; only three campuses admitted more California residents in spring of 2014 than in 2013 (although some other campuses, like Berkeley, might have admitted additional in-state students off the wait list over the past few months.) And the percentage (as distinguished from the absolute number) of out-of-state and international students is also on the rise; the share of non-Californian undergraduates within the system nearly tripled from the 2007-2008 year (4.6%) to the 2013-2014 year (11.4%). Finally, it seems true that the additional revenue that students from outside California generate explains part of recent trends. Base tuition for in-state students is around $13,000/year, whereas out-of-state and international students are charged more than $35,000, and UC officials have themselves said that the additional revenue is helping the system.

But many of the key factual assertions made by critics are simply false. UC spokespersons have vehemently and repeatedly said that out-of-state admittees are more, not less, qualified (as judged by SAT scores, high school GPAs and other numerical metrics) than in-state admittees. That doesn't mean that every non-Californian who was admitted had higher grades and test scores than every in-state applicant who was denied (because admissions decisions take account of other, non-numerical, qualitative factors like artistic or musical talent, etc.), but it does mean that, in the aggregate, the numerical credential bar is higher for applicants outside the State.

On top of that, non-Californians bring one credential that in-staters generally can't: geographical diversity. Great universities pride themselves on drawing students from (and having name recognition and alumni contacts throughout) the entire nation and world. Such diversity adds to the mix of distinct outlooks on campus, and increases the range of opportunities for folks when they graduate. As UC spokesperson Diane Klein is quoted as saying: "Undergraduate and graduate students from throughout the United States and the world bring fresh perspectives and, in an increasingly interconnected world, help California students better prepare to operate in the global economy." So (even granting that UC exists largely to serve the State) having more non-Californians may offer benefits to the Californians who are there. (The high quality and geographic diversity that out-of-staters bring may partially explain why many states that aren't as large and diverse as California, like Michigan and Virginia, have for decades enrolled high percentages of out-of-state students in their flagship public universities.)

The Key Question of Whether More Non-Californians Means Fewer Californians

But perhaps the biggest mistake that critics make is to assume that having more out-of-state and international students means that fewer in-state applicants can be admitted. Precisely the opposite is often the case. The question isn't whether the number of in-state admittees has been stagnant over time (that may very well be the case because of decreased funding by the State legislature); the question is whether the number of in-state admittees would be smaller still if non-Californians weren't being admitted. Why might admitting non-Californians allow more Californians to be admitted? Because every non-Californian is charged an extra $23,000 in tuition beyond what in-staters are charged. And that money may more than pay for the out-of-stater, creating a surplus that can be used to subsidize an in-stater.

The UC has fixed costs (physical plant, tenured faculty, etc.) that it must pay no matter what, and variable costs (relating to non-tenured faculty and staff, utility expenses, healthcare and security obligations, insurance, etc.) that increase as the number of enrolled students rises. Because of fixed costs, the expense the University incurs, on the margin, in educating additional students may be somewhat smaller than its average cost-per-student. Of course, there may be an upper limit on how many students can fit within a campus. But there are also points on the spectrum where more students could be accommodated without major long-term infrastructural investment, provided we could find money to pay for the marginal (variable) costs of adding them.

For example, suppose that, at some point on the cost curve, the marginal cost of educating an additional student is about $24,000. Enrolling an additional in-state student alone at that point would not be feasible; she would cost UC another $24,000 but she would pay only $13,000 in tuition, yielding a deficit of around $11,000. But if an out-of-state student were enrolled, he would pay $35,000, which is enough to pay for his own marginal cost ($24,000) as well as the deficit created by the additional in-state student. So, in this simplified example, adding an extra out-of-stater increases the aggregate number (and perhaps also the percentage) of non-California enrollees, but does so in such a way as to allow for the enrollment of an additional in-state student who otherwise could not be admitted. Again, the relevant question (even for the critics) shouldn't be how many in-staters and out-of-staters are being enrolled. Instead, it should be how many in-staters could be enrolled if we cut back on out-of-staters. And the answer is likely going to be: fewer than we have now.

Should In-Staters Be Given the Option of Paying Higher Tuition?

So it is clear that admitting persons who are are willing and able to pay a higher tuition can permit the University to accommodate additional persons who pay the lower tuition rate. All of this brings up the question: Why not offer admission to some of the in-state applicants who are currently being denied if these applicants are willing to pay the higher tuition rate? After all, if the problem is simply a lack of revenue (owing largely to reduced allocations from the legislature), why shouldn't we give in-staters (whose parents and ancestors paid for the University) the first option to pay additional tuition, rather than offering those higher-priced slots to non-Californians?

Imagine, for example, that we said to the 500 in-state applicants who were denied admission to UC Berkeley but whose application files were the closest to making the cut (the first "500 out," to use a March Madness Bracketology term): "You can come to Berkeley, but only if you are willing to pay a tuition rate higher than that being charged to other in-state admittees, who are slightly more worthy of admission than you are." How would that go over? I have a few (preliminary) thoughts.

First, some might object to this approach because, as noted earlier, admitting in-staters who are willing to pay more instead of out-of-staters deprives the University of the ultra-high-quality students and geographical diversity that non-California enrollees are currently providing. But put these factors to one side. Imagine that out-of-state enrollees had the same grades and test scores as the "first 500 out" group I described above. And assume that, because California is almost a nation state unto itself, we already had sufficient geographic diversity without importing out-of-staters.

Even then, I suspect many folks would reject the approach I describe simply because it seems wrong to "sell" UC seats to Californians who have the money to pay for them. Among those "first 500 out," only those families who can afford the higher tuition would be able to accept the offer, such that ability to pay would formally and openly become a criterion of admission. And that is in conflict with the notion that access to a slot in the UC is supposed to be based on your talent, your hard work and your performance, not on your parents' bank account. (Charging out-of-staters higher tuition doesn't quite raise this conflict, because their higher tuition is justified not by their lesser qualifications but rather by their lack of investment in the system-a perfectly reasonable factor to use in setting tuition-and thus need not be thought of as "selling" seats to lesser qualified folks the way charging more to some in-state enrollees than to other in-staters, based on the strength of their admissions files, would.)

Notice that there are some public areas, such as toll roads and (now) security lines at airports, where we have allowed people to gain special access if they are willing and able to pay for it. But we may tolerate such commodification in these settings because we don't think of allocating resources in these arenas as involving a meritocratic assessment the way we conceive of college admissions. We also don't think of roads and airports as gateways to economic mobility the way higher education has been billed. As a result, letting people buy their way out of car traffic and long boarding lines doesn't require that we confront-and grapple with the inaccuracy of-deeply held and desirable societal values such as the notion that college ought to be equally available to anyone who has the talent and work ethic to pursue it.

A generation ago, Guido Calabresi (who was a professor and then Dean of Yale Law School and who now is a federal appellate Judge) and Phillip Bobbit (a law professor at The University of Texas School of Law) wrote a book called "Tragic Choices," in which they discussed how difficult it is for society to move from a bureaucratic or professionalized allocation of scarce resources (the way university admissions typically operate) to a market-based approach, when doing so starkly exposes the frailty or falsity of important societal ideals (like equal educational access). We all know that at some important level family wealth makes access to college easier (and lack of wealth makes college for many quite difficult), but explicitly selling off UC slots to wealthy in-staters would require us to confront unpleasant truths in a way that we may not simply be able to handle.

Private universities can (and sometimes do) take a student's ability to pay into account at the admissions stage, and many such universities do admit less qualified yet wealthy applicants. But these institutions get to make their decisions outside the public view. Importantly, because of transparency requirements concerning public college admissions and tuition-setting processes (which reflect another deeply held societal norm-that public institution operations should be visible), there is no easy way to sell UC seats without everybody seeing exactly what is being done. That may be why (as far as I am aware) no high-level policy-makers in California have seriously floated the approach I discuss here.

Notice also that selling off some UC seats to wealthy in-staters might allow significant numbers of additional poor or middle class Californians to attend (so long as the sales price exceeds the marginal cost of educating the wealthy student.) Indeed, one could imagine a scenario in which UC seats would be auctioned so that a few mega-wealthy but less qualified applicants would end up subsidizing large numbers of lower or middle class enrollees. So if our focus were merely on increasing the absolute number of highly qualified lower or middle class Californians who could be accommodated within UC, a regime in which the University sold or auctioned off seats might have some upside. But that regime would do major damage to important societal ideals.

Finally, notice that these tradeoffs between the accomplishment of pragmatic goals and the preservation of (sometimes unrealistic but nonetheless attractive) societal values are not always static. During the Civil War, for example, draftees were able to buy their way out of military service by hiring people to take their places. Today, we would (rightly) find such a practice abhorrent; we would not permit it because it would expose too starkly the (persistent) reality that it is the poor who are ultimately forced (by economic distress) to bear the brunt of fighting our wars. In suggesting that things change over time, I am not predicting that UC seats will be formally commercialized anytime soon. But I will point out that many folks, myself included, did not fully foresee all the changes in public higher education funding (especially as to professional schools) that have taken place over the last two decades. And I could imagine ways of possibly moving toward the approach I describe above without seeming to sell seats so explicitly-for example, charging all in-state admittees a higher tuition but giving all but the last 500 admitted a "merit" scholarship so that the net price for almost everyone remains unchanged. Indeed, many public law schools-whose state subsidies were cut earlier and more deeply than those at the corresponding public undergraduate institutions-have moved to this kind of model. Some public colleges may end up following suit to address their revenue problems, even though many of us would favor restoration of legislative funding even more. So never say never.

Cross-posted from Justia's Verdict.