Tuition Shock Hits Business Majors

With state aid disappearing, more schools are balancing budgets on the backs of business students, charging them higher tuition than other students

By Alison Damast

(Corrects the spelling of Dean Carl Zeithaml.)

Dean Jan Williams watched with concern as enrollment at the University of Tennessee at Knoxville's College of Business Administration more than doubled in the past seven years, growing from 2,500 undergraduate business majors in 2004 to a bulging 5,300 students in 2011.

With state budget cuts for next year looming and federal educational stimulus funds due to run out soon, Williams knew he had to look for alternative sources of revenue or start turning students away. Knoxville's business college, (Tennessee-Knoxville Undergraduate Business Profile), has 120 professors, the same number it had in 2004, and classes have become larger and more crowded in recent years. "We are just absolutely bursting at the seams. We needed a significant infusion of resources," Williams says.

This fall, the business college started charging students an extra $50 for each credit hour, a move that will add approximately $3,200 to the cost of their tuition over four years. The fee will raise about $4 million in additional operating funds for the business school, enabling the school to hire a dozen new professors, add new sections, and reduce class sizes. Says Williams: "I've been working on this plan for seven or eight years, but it took things getting as severe as they are with budget cuts to get the attention and support for it from the university."

Some Majors Are More Expensive

Differential tuition, where schools charge different prices to individual students based on their major or field of study, is becoming an increasingly popular funding mechanism at resource-stretched public research universities in the U.S. Students at schools across the country, especially those in business and engineering programs, are increasingly being asked, along with their families, to shoulder a larger tuition burden as schools grapple with dwindling state financial support, surging enrollment, and higher operating costs, studies show. The trend has accelerated in the past decade. Of the 162 public research universities in the U.S., 92 now have at least one undergraduate program with differential tuition, with 18 having introduced the practice in the past three years, according to a study on differential tuition done by Glen Nelson, chief financial officer for the Arizona Board of Regents and a staff affiliate at the Wisconsin Center for the Advancement of Postsecondary Education. In the past school year, schools in states from South Carolina to Tennessee have introduced differential tuition, and on Feb. 28 the University of Virginia's McIntire School of Commerce (McIntire Undergraduate Business Profile), the second highest-ranked undergraduate business program in Bloomberg Businessweek's 2011 ranking, announced a plan to implement differential tuition for business majors this fall.

Even two MBA programs—at the University of Nevada campuses in Reno and Las Vegas—are considering differential tuition schemes. At Reno, the move comes after state budget cuts forced the school to eliminate its supply-chain management program. At both schools, the proposal would increase MBA tuition 40 percent, or $100 per credit hour. The Nevada Board of Regents is expected to vote on the proposals later this month.

"The trend is continuing, and I think with fiscal pressures for the various legislative bodies, there will be continued pressure on boards and administrators to consider differential tuition as an alternative source of revenue," says Nelson.