Cap on out-of-state students costs UNC millions
Posted May 28
Updated June 1
Chapel Hill, N.C. — 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.
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.