Cap on out-of-state students costs UNC millions

Posted May 28, 2016
Updated June 1, 2016

The UNC System requires a strict limit on out-of-state students.

— A 30-year-old admissions policy is costing schools in the University of North Carolina system big bucks.

In March of 1986, the UNC Board of Governors adopted policy 700.1.3, which capped out-of-state enrollment at no more than 18 percent of total enrollment. However, this cap only applies to the incoming freshman class, meaning transfer and exchange students are not included in the allotted 18 percent. Likewise, the policy stipulates that the NC School of the Arts is exempt from the cap and other exceptions can be potentially granted at request.

If system schools exceed this cap, the board can reduce the school’s operating budget for the following year. Most recently, UNC-Chapel Hill surpassed the cap by 0.3 percent, enrolling a total of 41 students beyond the 18 percent limit. In response, the Board penalized the university $1 million.

Ashley Memory with UNC’s Admissions Office said the penalty is due to the university’s "yield," or the difference between the number of student offered admission and the number who accept. The variance makes an exact ratio of in-state students to out-of-state hard to predict.

“There’s how many students do you admit and how many students do you enroll?” Memory said, “And because the cap still holds true, it does limit the amount of out-of-state students we can admit and ultimately enroll. And it’s difficult to predict how many students will accept that admission. That’s why we’ve had a couple of years where we’ve gone over on out-of-state enrollment a little bit and why we’re subject to penalty by the system.”

This penalty, a reduction in the operating budget, affects all parts of campus for the upcoming year. Phil Asbury of UNC’s Financial Aid Office said the board’s penalty often does not affect financial aid options for in-state or out-of-state students but causes a reduction in money available to both types of students in other aspects around campus.

But more importantly, where did this 82-18 admissions ratio originate?

The first mention of the 18 percent cap came from former UNC System President William Friday in 1986. In a letter to the board’s educational planning, policies and programs committee, Friday cited a rise in out-of-state enrollment and recommended the board “establish more specific policies concerning out-of-state enrollment at the undergraduate level.”

The committee, led by Reginald McCoy, then drafted the policy, which was later adopted using Friday’s suggested 18 percent cap.

Both McCoy and Friday, as well as many others from that 1986 board, have since passed away, leaving few indicators in the board’s archives as to where this specific number came from.

McCoy’s original statement in presenting the policy said out-of-state students were a “welcome and important segment of our population. At the same time,” he added, “we also recognize that as a state university we have a special obligation and responsibility for the education of North Carolinians.”

Thirty years later, North Carolina lawmakers are still in agreement. Representative Nelson Dollar said, “Out-of-state students provide additional diversity in the student population and cover a larger share of the cost. On the other hand, our long-standing taxpayer support depends on in-state students being able to access the university system their family’s taxes are paying for. That’s the basic answer.”

The policy reflects a desire for UNC institutions to serve state residents first and foremost, but the reasoning for an 82-18 percent split is still unknown.

Repeated attempts to get in contact with the current UNC Board of Governors and current System President Margaret Spellings left the question unanswered. And an even bigger question still looms: should this 30-year-old policy still apply today?

In a recent article by Douglas Dibbert titled “Where Tar Heels Are Born and Bred,” he examined the 16 system schools in-state to out-of-state student enrollment. Exceptions to the out-of-state enrollment cap have often been granted for NC A&T engineering students, and the policy explicitly states it does not apply to the School of the Arts. Otherwise, the other 14 universities average about 13.3 percent of out-of-state enrollment, with UNC-Chapel Hill being the only one regularly exceeding the cap.

Out of State enrollment in state universities

Even more shocking, UNC’s out-of-state enrollment is significantly lower that the majority of its public peer institutions. The next closest to the 18 percent cap is Maryland’s 28 percent out-of-state enrollment, and other state universities admit even more out-of-state students, such as Virginia’s 34 percent out-of-state enrollment and Michigan’s 45 percent. These enrollment percentage differences lead to even greater revenue differences.

UNC Chapel Hill’s current revenue totals around $367 million but, applying Michigan's student distribution of 66 percent in-state and 37 percent out-of-state, would result in a gain of $111 million in revenue. The School of the Arts, which is exempt from the cap, almost has a uniform student distribution of 48 percent in-state to 52 percent out-of-state. Applying such an evenly spread student distribution would result in an enormous gain of $238 million in tuition revenue, a total of a whopping $605 million. While these are estimations, it is evident that having a larger out-of-state percentage would result in huge gains in revenue for UNC.*

So the question remains, why are UNC system schools restricted to an 82-18 percent enrollment ratio of in-state to out-of-state students? After 30 years and millions of dollars in lost revenue, that question has yet to be answered by the Board of Governors.

Bailey Pennington and Danila Chenchik are students in the University of North Carolina at Chapel Hill Media Hub program

* The comparison of UNC revenue to that of peer institutions was updated and clarified.


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  • Bradley Green May 29, 2016
    user avatar

    NC constitution, section 9.9
    "The General Assembly shall provide that the benefits of The University of North Carolina and other public institutions of higher education, as far as practicable, be extended to the people of the State free of expense."

    Its quite clear in the state constitution that the publicly funded university system is required to primarily serve the citizens of NC, not citizens of other states. I'm not sure what these other state constitutions have written in them, but I think this explains why we have an 82/18 rule.

    Lets do some math here. The estimated cost of tuition on UNC's website is $9,000 for residents and $34,000 for out of state students. That's a difference of $25,000 per student, per year. For the 40'ish extra student's UNC admitted above the cap, this is just over $1,000,000, which more or less explains the penalty that the school gets for going over the cap ($1,000,000). If you remove the cap, why take in-state students? They aren't worth it.

  • Brian Jones May 29, 2016
    user avatar

    This liberal, money grubbing university should just give up the ghost............and become a private, "for profit" university for out of state students.............. Then we can call ourselves the Baby Blue Devils.

  • Matt Nickeson May 29, 2016
    user avatar

    The real question that this piece of "journalism" does not address is the total cost to tuition ratio for in-state and nonresident tuitions. The easiest and most simple solution it would seem to me would be to ensure that nonresident tuition is equal to or greater than the properly assigned costs for each student. If the ratio were greater than one then an out of state resident attending university here would subsidize resident students. That way the universities and government don't have to worry about the regulations and subsequent enforcement.

  • Ronald Woodard May 28, 2016
    user avatar

    What is shocking is that anyone would be stupid enough to ask this question. The UNC system is to overwhelmingly serve North Carolinians, the citizens who pay taxes to support UNC. The UNC System is not a One World University.

  • Robert Cassas May 28, 2016
    user avatar

    Yes please, keep the cap where its at. The whole "costing us millions of dollars" thing was a bit of shoddy journalism, in my opinion. Its an argument that doesn't really make sense, since NC schools are for NC students.

  • Charles Edwards May 28, 2016
    user avatar

    I hope the cap is never raised. Was perhaps the student-written article was penned by out-of-state students?

    NC Taxes pay for much of the operating costs of our UNC-system schools and are underwriting the tuition for both in-state and out-of-state tuition. That's right, your taxes are underwriting the tuition of students who come from out of state. Considering that many *qualified* in-state students are turned away every year, while out-of-state students are filling those seats, do you wish to *increase* the out of staters into our institutions? I certainly don't. Also, if look at the chart comparing UNC to other state peer institutions and do research, you'll also see out-of-state tuition costs for those institutions is also much higher than UNC system. Want to increase our cap, then charge the out-of-staters the *full* (and I mean full) cost of their education at the NC school.