Differential Tuition Proposal

UPDATE #2

A tuition surcharge has been approved for upper-division and graduate business classes.

For complete information, view the Fairbanks Daily News-Miner article, "Tuition surcharges approved for UAF business courses."

UPDATE #1

The differential tution proposal was presented again to the UA Board of Regents on Thursday, Sept. 26. The Board of Regents referred the decision to President Pat Gamble.

Are you a student who’s heard rumblings about something called “differential tuition”? Are you not sure what that is, but you’re pretty sure you won’t like it? If so, this page is for you. Here you can find the lowdown on differential tuition – and why we think it’s so important for the students at the UAF School of Management (SOM).

What is "differential tuition"?

Differential tuition is an increase students pay in addition to their regular tuition and is traditionally used by schools whose students will earn substantially more than the average graduate (business, engineering, and nursing are the most common). We know “increase” and “tuition” are never two words you want to see in the same sentence, but hear us out.

Unlike general tuition, which is distributed throughout UAF, differential tuition stays within the school – aka the School of Management. Why is that important? Check out the next section.

Why does SOM need differential tuition?

We’re too popular. Seriously. Over the last six years, we’ve seen our student body grow by over 70%. That increase means we need more – more faculty, more class sections, more classes online. Quality business faculty aren’t cheap. To attract the best and brightest we need to pay them a competitive salary which, on average, can be twice as high as faculty in arts and sciences. This is necessary to entice them from the private industry with its seductive six-figure salaries.

At the same time, there are budget constraints creating challenges. Every year, UAF faculty receive cost-of-living increases to keep their salaries competitive with other universities from around the country. SOM covers half of that for our faculty, an amount which goes up every year with inflation. On top of that, we pay annual pullbacks – ranging between 1 and 4.5% of our budget - which go to support other programs at UAF.

To put that in perspective, the SOM budget is 95% salaries, the remaining 5% is what is used to run SOM and what has to cover the increased costs. Tuition, as of now, makes up just 24% of SOM revenue, the rest comes from the State of Alaska.

Alright, so things are looking grim, but we have a plan.

What is SOM's differential tuition proposal?

What we’re proposing, and what SOM Dean Mark Herrmann presented to the UA Board of Regents in April, is to raise tuition 25% for upper-level undergraduate and graduate classes over the course of two years: 10% the first year, 15% the second year. If approved, the tuition increase would begin September 2014.

If that’s looking like a lot of percentage points to you, we get it. The good news is, over the course of earning your degree; it levels out to an average increase of 3-4% of your total college expense. That’s about $3,000 added to the total cost of a four-year degree, or $375 per semester. For many, this increase will be covered by financial aid since SOM tuition is already very low compared to many other universities and colleges.

What has SOM done already to cut costs?

Last year, in the fall of 2012 when budget forecasts began looking grim, SOM immediately did what it could to cut costs. A series of emergency sessions were held and the operating budget was cut in half. Cuts included supplies, faculty and staff development, faculty travel, and reduced compensation for program directors.

These cuts were added to savings that had already been put in place several years earlier that included hiring less tenure-track faculty to fill open positions, moving all SOM student organization to funding from private donors, increasing average teaching loads, and using more teaching assistants to teach courses.

What happens if the differential tuition proposal DOESN'T pass?

It won’t be pretty. Unfortunately, we are out of options that don’t negatively affect students. Even with the cuts SOM has made, we’re looking at deficits reaching over a million dollars in the next five years. The next step will be to begin cutting staff and faculty positions, reducing the number of courses offered, and eliminating of some of our programs, all of which are in high-demand.

The biggest danger is that SOM could lose its prestigious AACSB accreditation. This accreditation is what sets SOM apart from other business schools. SOM is one of only 178 schools across the world to have both an accredited school and accounting program. AACSB accreditation makes SOM graduates stand out to potential employers and lets potential donors know that SOM students are a good investment.

What happens if the differential tuition proposal DOES pass?

SOM doesn’t just want to maintain the status quo, we want to be the best option for business students. We want to build on the quality already demonstrated at SOM. Over the last decade, on the ETS business exam, SOM averages in the 92th percentile out of over 700 schools and colleges. We want to continue the SOM tradition of excellence. Our accounting students pass the CPA exam at rates higher than the national average.

With the additional revenue from differential tuition, more highly-qualified faculty will be retained and hired. There will be more class sections offered and more classes available online. There will be more classes offered during the summer, turning SOM into a 12-month school. All this means that you will have an easier time taking the classes you want, when you want, from experienced faculty.

In the long-run, you’ll be able to graduate sooner, get out in the workforce, and earning your competitive paycheck. The average starting salary for a 2013 business graduate (Bachelor's degree) is $54,234 (source). If you can get out in the workforce just one semester (one-third of a year) early, the average increase in your tuition ($3,000) will pay for itself and earn you up to $15,000 more than you would have earned otherwise.

Want to know more?

That’s the SOM differential tuition proposal in a nutshell. For more detailed information you can read the official SOM differential tuition proposal. You can also listen to the presentation Dean Herrmann gave to the UA Board of Regents:

Student & Faculty Support

  • "As a student of the UAF School of Management, I had the honor of being the 2012-2013 president for GAAP (Great Alaskan Accounting People), the Volunteer Chair for the 2013 Business Leader of the Year event and one of five students responsible for organizing the Northrim Roast and Boast 2012 marketing project.

    Preparing students for the professional worlds is a top priority for the School of Management. After successfully completing a local internship, I can attest to the fact that the accreditation stands out to employers.

    The addition of the differential tuition isn't meant to punish students, but to ensure the school maintains its quality education. It would be a shame to see programs cut due to lack of funding." -Chris Piech, Accounting, Class of 2014
  • Letter of support from the Associated Students of Business (ASB), Great Alaskan Accounting People (GAAP) and SOM Student Advisory Council.
  • Letter of support from faculty member Wendy Tisland.

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