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Chancellor Birgeneau on keeping public universities affordable: 'We have to start now'

30 January 2008

For more on the affordability challenge, explore a special editorial package on the UC Berkeley NewsCenter. And on this recent "Bear in Mind," Chancellor Robert Birgeneau leads a conversation about how and why the university is confronting the challenges of access to and affordability of higher education.

Harvard University's dramatic announcement in December that it would extend financial aid to "middle-class" students - by Harvard's reckoning, those from families with incomes from $120,000 to $180,000 - sparked a nationwide teach-in on the economics of higher education. When first Yale and then Princeton followed with similar plans of their own, one question became unavoidable: What can be done by public universities - which educate the vast majority of America's undergraduates but lack the endowments and other resources available to private institutions - to keep higher education affordable for families with incomes below six figures?

Chancellor Robert Birgeneau has been seeking answers to this question since taking the helm at Berkeley in 2004. In the wake of Harvard's announcement he's been among the most vocal - and visible - advocates for action on behalf of students from low- and moderate-income families, making the case via newspaper and television interviews, an op-ed piece published in USA Today, and a presentation to the UC Board of Regents. He spoke with the Berkeleyan about the issue last week in his California Hall office.

Q. The rising cost of a college education has been much in the news lately, but the issue was on your radar screen long before Harvard's announcement. How and when did you become concerned about affordability at Berkeley and beyond?
A. This goes back about three years. When I first came here as chancellor and looked at all of our accessibility data, I found them quite impressive - the extraordinarily large number of students we have from financially disadvantaged backgrounds and, in particular, the number of students that have Pell Grants compared with those at Michigan, Yale, and schools of similar rank. I consider this to be a really significant success at Berkeley.

Graphic
Fee increases hold down self-help levels

Then, of course, we started looking at budgets and addressing some of the challenges of providing access to low-income students into the future. We projected that the self-help level [the amount a student is expected to contribute from work and borrowing] would grow substantially over the next decade and beyond. At Berkeley we've managed to keep the self-help level from skyrocketing by careful cost controls over the past three years, but you can only control costs so much. That's not a permanent solution.

About a year ago we redid the projections just for Berkeley, and those projections implied that the self-help level was going to increase rapidly if we didn't do something immediately.

Q. You're the chair of the UC Affordability Work­group, which was established by Provost Rory Hume in October. So it seems your concerns are shared by others at the highest levels of the system.
A. Before these most recent projections I had relaxed a little bit, because we had managed to moderate the growth of the self-help level. It turns out that simultaneous with my renewed concerns, [Board of Regents Chair] Dick Blum became very concerned as well, and, like me, he was skeptical that freezing student fees was going to be an appropriate strategy, in spite of its political popularity. So he asked Rory to set up a committee that would look at the challenge of accessibility for the entire system. It has been quite educational.

The workgroup has done a wide variety of projections for the system as a whole, based on quite specific financial assumptions. One interesting fact I learned is that the average self-help level for the whole system is close to $9,200, whereas ours is closer to $8,000. That's for two reasons. One, [Vice Chancellor for Student Affairs] Harry LeGrande and his staff have done extremely well at managing costs. Two, Berkeley has a moderate endowment for financial aid for undergraduates, and it is overwhelmingly committed to needs-based aid. Specifically, 87 percent of our financial aid from endowment is needs-based. That is by far the highest percentage in the UC system. At Berkeley, to the extent that we have such resources, the focus is on providing them to poor students. So our success in keeping the self-help level down, relative to the UC system, has been due to a combination of efficiencies and resources - we have more resources and we direct a larger percentage to accessibility.

If we take the $9,200 self-help number for the system, and assume a 6 percent fee increase on average, which looks politically realistic, that projects to a self-help level of $16,700 for our students in another 10 years.

Q. You referred to skepticism that freezing fees would help poor students afford a UC education. Yet freezing fees has become a rallying cry for UC students, who complain of substantial increases year after year.
A. The single most complicated fact for people to understand is that freezing fees actually increases student debt - it's so counterintuitive.

Q. That's because fees pay for financial aid?
A. Correct. Now, that's with the existing financial-aid system. Currently, when fees increase, 33 percent of those funds go back into financial aid, what we call "return-to-aid." If you freeze fees, you freeze the return-to-aid. We've projected the self-help level in 2017 to be $16,700 if fees increase 6 percent a year; if you freeze fees, the self-help level will be $18,300, because both the return-to-aid funds and Cal grants [which cover fees for recipients] remain stagnant while non-tuition expenses - housing, health insurance, etc. - keep going up.

Of course, it doesn't mean that the state couldn't change the system. But as things are, if you freeze fees, you increase student debt.

Q. Would one of your goals be to restructure the current financial-aid system?
A. I think we need to establish a public policy on what represents a reasonable level of fees. I have my own ideas on that. The policy used to be that fees should be as low as possible. Personally, I think that extremely low fees represent bad public policy since it, in essence, transfers money from the poor to the rich. Obviously, I do not believe in doing that. I think that fees should be set at some reasonable fraction of the real total cost of education.

Q. So you're in the peculiar position of having to make the case that rising fees equal lower cost. Doesn't that make the politics as complicated as the math?

A. It's quite central to the politics. Unfortunately, student leadership almost always advocates for freezing fees, which, as I have already said, only hurts financially disadvantaged people. My own preference is to have less focus on the fee structure and more on creating new sources of financial aid.

In my presentation [to the regents] we talked about new sources of aid - like a public-private partnership, increasing the return-to-aid, improving the Cal Grant program - as a way of addressing this challenge. In addition, we must also alleviate the burden on students from middle- class families. We must find ways of moving some resources up the financial ladder to help middle-class families without doing too much damage to students from families whose income is in the $20,000 to $40,000 range.

Q. Tell us more about middle-income students.
A. Middle-class people are the most disadvantaged by this system. If you are admitted to Berkeley and your family income is above $90,000, we currently provide zero, or close to zero, financial aid. You must cover the total cost of $25,000 on your own. According to Harvard's new financial-aid scheme, if you instead went to Harvard you would pay only 10 percent of that family income, which would be $9,000 for a $90,000-per-year family. That's hugely different.


Chancellor Birgeneau: "We do not have a crisis now, but there is a crisis in front of us, and so reality will catch up to perception. We cannot wait for that to happen." (Peg Skorpinski photo)
 
I am worried that we are going to dig a hole in the middle. That is, students from well-to-do families who want to come to Berkeley will still come. Poor students will also come, but middle-class families may find the total cost just too burdensome. Those who have the option may choose to attend private universities that offer generous financial-aid packages to students from middle-class families.

Berkeley is perhaps the only public university that has as many Nobel Prize winners as MIT, Harvard, etc., and as many members of the National Academy of Sciences and the American Academy of Arts and Sciences. We are privileged to have a faculty here that's every bit as good as the faculty at any of the elite privates. That also makes us vulnerable, because an academically ambitious student from a middle-class family who looks, for example, at studying engineering at Berkeley, Stanford, and MIT may conclude these three schools are about equal, but it will cost that student $9,000 to go to Stanford or MIT and $25,000 to go to Berkeley.

Q. This is fundamentally an issue of resources, which are in notoriously short supply these days in California. The workgroup's report proposes both raising new funds for a $2 billion endowment and reallocating existing resources.
A. In coming to consensus, the committee concluded that private fundraising can and must be an important part of the solution. I am optimistic that we can be successful here at Berkeley in such fundraising, but it may prove to be much more of a challenge for a younger campus like UC Riverside.

Let's say the amount Berkeley would need to raise for such an endowment is in the ballpark of $20 million a year over the next 10 years. I'm assuming in this scenario that this would be matched dollar for dollar by the state. We are currently raising about $300 million a year, so we would have to increase our total from $300 million to $320 million. That is entirely feas­ible for Berkeley - and I am confident we would succeed because so many here are totally committed to addressing the accessibility challenge. However, this would represent a much bigger challenge for campuses like Riverside, Santa Cruz, and, of course, Merced. In some cases they would have to nearly double their annual fundraising just for this purpose - this would clearly take time. So, at least in any scheme relying on state matching, we will need to work out a system that's fair to the campuses that do not have such robust fundraising operations.

Also, with Dick Blum's passion for this challenge, we believe that at least some of this money will be raised centrally by the regents. Any funds raised centrally could be distributed in such ways as to compensate for the differences in the campuses' abilities to create an endowment on their own.

Q. And a year ago you issued the "Chancellor's Challenge" to match contributions from the UC Berkeley community to help support student aid.
A. Yes. I announced that out of central discretionary funds - un­designated donations - I would match any donations made by students, staff, and faculty, including emeriti, to endowment funds for undergraduate needs-based financial aid. Donations up to $250,000 will be matched. So far, a number of people have taken advantage of this match, but we have a long way to go to have a high level of participation.

Q. In terms of reallocating available resources to maintain affordability, isn't it harder for Berkeley, given that we have to compete with Harvard and Yale for faculty salaries, facilities, and so forth?
A. Yes, that's correct. Nevertheless, given the importance of accessibility to both our identity and our public mission, I believe that we must raise the priority of undergraduate financial aid in our campus budget process. The single most important conclusion of our workgroup is that the balance must evolve - that is, we must make undergraduate accessibility equivalent to other priorities, such as staff and faculty salaries, infrastructure, graduate-student support, etc., when we make budget decisions. That will require some change.

Q. You say you're "totally committed" to this. Does affordability have a personal dimension for you as well as a professional one?
A. Yes. I'm one of many people who was only able to go to university because of robust financial aid. I'm here, and have the privilege of being chancellor of Berkeley, because there were people in the past who cared. In my case it was scholarships, because I had the good fortune of being a strong student and receiving merit-based scholarships. But if those merit-based scholarships hadn't been there, then I wouldn't be here.

In that era there were very few people from poor backgrounds who made it to university. And now, as I've said, I think it is our obligation as a public institution to ensure that any Californian who qualifies can afford to come to Berkeley.

Q. Yet the perception seems to be growing that a UC education is increasingly out of reach for many Californians. Are we in a situation now where we're in danger of the reality catching up to the perception?
A. Yes, that is indeed my principal concern. We need to bring down the alarming self-help levels that we're projecting in the not-too-distant future under the existing financial-aid system. I should add that we also need to be concerned about students with special circumstances - former foster children, orphans, students with families to support, undocumented students. We need more flexibility in our financial-aid system to address special cases.

We do not have a crisis now, but there is a crisis in front of us, and so reality will catch up to perception. We cannot wait for that to happen, because every one of the solutions our workgroup has put forth takes time to build up, whether it's raising endowment or increasing the set-aside for financial aid by a percent a year, or any other mechanism you can think of. We have to start now.

Q. What's the danger if we don't?
A. The danger is that the whole character of Berkeley will change. Exceptionally talented young people from poor families, who would make great students here and who deserve to be at Berkeley, are going to opt instead for either a local CSU or community college or for a private university offering a generous financial-aid package. It would, in my opinion, change the character of Berkeley in a very negative way, and we would not be fulfilling our obligation as a public institution.

Even in this difficult budget year, we need to request new funds specifically for needs-based financial aid, beginning with this year's budget. The University of California has to say that this is among our highest priorities. Whether this is a difficult budget year or not, we must begin now to invest in the future of California.