UO embarks on era of cost stability with guaranteed tuition

Admission form with mortarboard cap

The University of Oregon will enter a new era this fall with the launch of the Oregon Guarantee, the university’s pledge of financial certainty to all new undergraduate students.

Under the program, each new Duck will get to pay the same fixed tuition rate for up to five years. By ending annual tuition increases for individual students, the Oregon Guarantee will provide students with extra confidence as they and their families plan their investment in higher education.

The University of Oregon Board of Trustees approved the new tuition model without dissent at its meeting March 17, based on the recommendation of President Michael H. Schill. The program will be rolled out in the coming academic year. 

“I appreciate that at times like this, where there is a lot of focus on the short term, that we are not giving up the long term and taking this important step in fulfilling our fiduciary responsibility,” said trustee Marcia Aaron.

Schill acknowledged the challenging timing of the board vote, given the worldwide concern over the spread of COVID-19 (coronavirus) and the recent changes in university operations to promote social distancing. However, setting tuition now for the 2020-21 academic year is essential so the university can tell potential and incoming students this spring what their tuition rates will be, he said.  

“Students will be making their decisions very soon about whether they’ll be coming here,” Schill said. “We think students will find this (program) very attractive. This is basically an insurance policy … taking the risks of the world off the students and putting it on the university.”

Trustees said they supported the new guarantee because it will help attract students to the university, eliminate a barrier to their continued enrollment and assist them in the goal of a timely graduation.

“I’m so excited about this, I think it’s great,” said trustee Ginevra Ralph. “Students need to realize this is for their benefit.”

The UO has considered and begun a number of programs aimed at making college more affordable in recent years, in light of flat or decreasing state investment in higher education. The concept of guaranteed tuition emerged as one creative approach to help students manage tuition costs.

Both Schill and the Tuition and Fee Advisory Board — made up of students, faculty members and staff — recommended adopting a guaranteed tuition program after studying the concept in detail over several months. Students and other members of the campus community weighed in on the proposal at three public forums and during a formal public comment period.

Under the final version of the program, tuition rates next fall will be 9.75 percent higher than the current rates for new undergraduate resident students and 7.5 percent higher than current rates for new nonresident students. Tuition rates for those students will then be frozen for five years, regardless of the university’s budgetary situation, allowing students to focus on their studies.

Additionally, all mandatory fees controlled by the university administration will be locked for the same period, as will the differential tuition for the Clark Honors College and Lundquist College of Business, and the international student fee. The only mandatory fee not included in the Oregon Guarantee is the incidental fee set by the student government.

Once the program is up and running, the difference in tuition rates from one new student class to the next is expected to be similar to past annual tuition increases at the UO, typically under 5 percent each year.

“Having the ability to say to students and families, ‘This is what your tuition will be for four or five years,’ it’s very powerful,” said Roger Thompson, vice president for student services and enrollment management.

Current UO undergraduate students also will receive more financial certainty under the plan. The board approved locked tuition increases at 3 percent per year for up to four years for current students.

It’s the first time the board has guaranteed future tuition rates for UO students. The locked increases are much lower than what students at the UO have seen on average over the past decade. The 10-year average annual tuition increase for resident students has been 5.4 percent; for nonresident students, it has been 4.3 percent.

UO student Tova Kruss, who was a member of the tuition advisory board, said the locked-in increases for all existing undergraduates gives them “the same financial predictability and safety as new fixed-tuition students, while avoiding putting the pressure of higher tuition on any one cohort.”

“These more moderate price increases represent the school taking on more responsibility from the students, and making a promise that students will have the same high-quality education without having to worry about circumstances outside their control — such as the economy, governmental regulation, or a global pandemic — affecting their tuition” rates, Kruss added.

Because the Oregon Guarantee will shift the financial risk of potential future UO budget shortfalls from current students to the university, the board asked the UO to establish a reserve fund of $20 million to support the new program. Most of the funds for the reserve will come from philanthropic commitments, Schill announced.

“We set the amount by estimating what would allow us to recover if we faced a cut in state funding,” Schill said of the reserve.

For students receiving scholarships and grants, the pledge will protect the relative value of their aid packages. Those packages are usually fixed-dollar awards, so their relative value erodes when tuition increases. The new program will not affect the PathwayOregon scholarship program, which pays all tuition and fees for qualifying federal Pell Grant-eligible Oregonians.

And nontraditional students, who sometimes take longer than five years to complete their degrees, will benefit because they often faced the largest number of annual tuition increases under the old system.

With the Oregon Guarantee, those students will get five years of locked tuition. After that, they’d pay the same rate as the cohort that started the year after them in their sixth year; the same as the cohort after that in their seventh year; and so on.

“Given that there’s so much uncertainty for our students today, I have to believe that a promise to keep tuition at a certain level is even more valuable,” said Jamie Moffitt, the UO ’s vice president for finance and administration.

By Saul Hubbard, University Communications