In-State Students Pay Less Than Half What Their UNC Education Costs

Sep 4, 2014

Credit Michael Tomsic

This week, WFAE has been exploring the cost of the UNC system for in-state students and universities. Wednesday, we explained how the tuition check you pay doesn’t just support you or your child. It also goes to other students in the form of financial aid. 

Today, we look at why even if you pay full tuition, it's still a huge discount compared to what it actually costs the universities to educate you.

There's a ton of data out there on the costs of higher education for students. But there's much less data on the costs of higher education for universities.

One of the best sources for that is something called the Delta Cost Project. It breaks down how colleges spend their money. Rita Kirshstein directs the Delta Cost Project. She says at all public universities, what it costs to provide a student's education is a lot more than what the student actually pays.

“That's something I think the general public doesn't always understand,” says Kirshstein. “Most industries you can think of, you have a good or service and it costs you $10 to produce it, you sell it for $15. In higher education, it costs $10 to produce it, but you charge $5 or $6 or $8.”

The difference is what the state kicks in. On average, North Carolina covers about 60 percent of the educational costs for students in the UNC system, according to the Delta Cost Project. An average UNC system student pays about $6,200 a year in tuition and fees, but it costs the universities about $15,600 to educate that student.

The size of the discount is a surprise to all of the students we talked to. After all, tuition and fees are still expensive. UNC Charlotte student Ashley Kennedy thinks if anything, the $3,000-$4,000 she pays per semester is more than enough. 

“I don't think that I cost $32,000 to really teach. I think I'm an easy learner,” says Kennedy with a laugh.

At UNC-Chapel Hill, junior Alex Reinhold points out her family has already paid money into the system.

“We are tax-paying people and so it does make sense that we should be able to benefit from those tax dollars,” says Reinhold. 

Some students benefit a lot more than others. To this point, we've been talking averages. But different students cost universities different amounts. The key is their major.

“The best way to think about this is that an undergraduate student in philosophy costs a lot less than a student in engineering,” says UNC Charlotte Chancellor Phil Dubois. 

The UNC system has come up with a formula to calculate how much new students will cost based on their studies. It's called a 12-cell matrix.

A chemistry class with a high-tech lab and a music class with one-on-one instruction are going to cost a whole lot more than a philosophy lecture. The matrix accounts for that.   

“It spits out exactly what kind of money you will get at UNC Charlotte for educating that collection of students who have come in your doors and are expected to take their courses in those different categories,” says Dubois.

Dubois ran some examples. Educating a philosophy student costs about $39,000 over four years at UNC Charlotte. On the other hand, an engineering student doing all that lab work costs nearly $83,000. That's more than double the cost of the philosophy student.

“The vast majority of the state appropriation that comes in for those two students is going to go to that engineering student and not to the philosophy student because it's not needed to pay the cost,” explained Dubois.   

Either way, those students still got a discount. No matter what your major is, you get a pretty steep discount compared to what public universities in other states offer.

Rita Kirshstein from the Delta Cost Project says that's because the average nationwide is for students to cover about 60 percent of the costs. 

“What is so striking to me is the fact that North Carolina students are subsidized to a much greater degree than they are in most states - 60 percent nationwide and 39 percent in North Carolina,” says Kirshstein. “North Carolina students have got a pretty good deal.”

The vice chairman of the board of governors for the UNC system, Louis Bissette, agrees. He says the board pushes schools to keep tuition down compared to their peers.

“In most situations, we're not just in the bottom quartile, we're at the very bottom. So if you look at it that way, you can say our North Carolina students are getting a tremendous bargain in the tuition they pay to one of the UNC system campuses,” says Bissette.

Even so, he acknowledges tuition increases have consequences. They create a greater need for financial aid and in many cases, more debt for students. 

About 60 percent of in-state students take out loans. Of those, the average debt is about $22,000. Ashley Kennedy's education at UNC Charlotte will leave her with about $15,000 worth of debt. She says it's worth it.

“I'm just trying to better my own future and get a successful job,” says Kennedy. “There's a price for that and I'm willing to pay it, even if I hate paying it.”

Taylor Walker and her mom are glad the UNC system sets some tuition aside to help pay for need-based aid. Taylor received some of that aid but also had to take out loans.
Credit Michael Tomsic

Taylor Walker from UNC-Chapel Hill will graduate with about $16,000 worth of debt. How good of a deal does she think she’s getting? 

“I'll let you know when I get a job; I think that would be a really determining factor,” says Walker.

Members of the board of governors agree. The UNC system is surveying graduates and employers about how well the schools prepared them for the job market.

It's another way to look at the costs of the UNC system and whether they're worth it.