Differential Tuition
Revised 10/06/09
In December 2008, the Board of Regents, State of Iowa approved a proposal for the College of Business at Iowa State University to implement differential tuition for business students in the professional program with 60 or more credits, beginning in summer 2009. Differential tuition, sometimes referred to as ‘supplemental’ tuition, means that a college charges a rate of tuition above that which the university charges. Revenue from differential tuition will support expanded course offerings in core courses and key student programs.
Students will pay differential tuition only if they are in the professional program with 60 or more credits. They will not pay differential tuition if: 1) they enter the professional program with fewer than 60 credits, even if they take upper-level courses, or 2) they are pre-business students with more than 60 credits, as pre-business students are not in the professional program.
The following are frequently asked questions regarding the differential tuition. If you have further questions or comments, please email them to Dr. Michael Crum, associate dean, at mcrum@iastate.edu.
| 1. Why is the College of Business assessing differential tuition? |
The College of Business has the largest average class size of any college at Iowa State and teaches the most student credit hours per full time equivalent faculty; both of those measures are nearly double the university average. This constrains our ability to help students master the subject matter and develop necessary communication and analytical skills to maximize their contributions to society and their professions. Our student-faculty ratio is higher than any undergraduate business schools among ISU’s Peer 11 universities, which is made up of Iowa State and other similar universities nationwide, such as Illinois, Minnesota, and Wisconsin. Our student satisfaction rating, as reported by Business Week magazine, is also the lowest in our Peer 11. Key factor s in student satisfaction are class sizes and access to faculty. Charging differential tuition gives us the resources to hire more faculty, reduce class sizes, and increase the quality of the education we are able to provide. |
| 2. What is the amount of the tuition increase? |
Differential tuition will be phased in over three years, beginning with an increase of $250 per semester in 2009-2010. In 2010-2011 and 2011-2012, the previous year’s differential tuition amount will be adjusted by the same percentage increase as the university’s base tuition rate, plus an additional $250 per semester. In 2012-2013 and beyond, differential tuition will be fully phased in and will be adjusted annually by the same percentage increase as the university’s base tuition rate. Examples are included in question #13 at the end of this document. For part-time students taking 11 or fewer credits, differential tuition will be pro-rated during both regular semesters and summer sessions. |
| 3. How much additional revenue will this generate for the College of Business? | The amount will depend upon the number of students who are majoring in business. If the fully implemented level of differential tuition had been in place in 2007-2008, it would have generated an additional $2.5 million for the college. |
| 4. What will the College of Business do with this additional tuition revenue? |
Based on $2.5 million revenue per year:
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| 5. How will College of Business students benefit from differential tuition? |
Based on the revenue projections stated above, the college would hire 11 new faculty. The college intends to reduce class sizes in 300-level core courses from 200-300 students down to 60-70 business majors, which would improve the classroom learning environment and offer increased student access to faculty. Additionally, the college would be able to offer an increased number of sections and more new courses, meaning fewer students would be turned away from oversubscribed 300 and 400 level courses. The college recently created a Communication Program in response to surveys of employers and graduates who told us that students’ communications skills need improvement. This program provides direct assistance to students and helps faculty integrate more communication skill development in their classes. Funding through differential tuition would allow the college to fully staff the program so that it can meet the growing communications needs of everyone in the college. The Gerdin Citizenship Program is a new program, enthusiastically endorsed by the companies hiring our graduates, aimed at increasing the involvement of freshmen and sophomores in the college. Its first year was very successful, but currently the program is optional and can only serve a limited number of students. Funding from differential tuition would allow for staffing to open this program to more students. |
| 6. What is the expected financial impact of differential tuition on students? |
WOnce fully implemented, most business majors will incur an additional $3,100 in tuition over four years. This might be greater for students pursuing double majors in business who require more than four semesters to meet requirements. At fall 2009 tuition rates ($2,878 per semester), an in-state student will pay $23,024 over eight semesters at Iowa State, so the additional $3,100 represents a 13.5 percent increase. However, differential tuition will only increase the total cost of four years at Iowa State University (including room and board, fees, and books) by less than five percent. |
| 7. Are other colleges doing this? | Yes. Iowa State's College of Engineering is phasing in differential tuition and will eventually charge its juniors and seniors an additional $875 per semester. The University of Iowa charges its juniors and seniors in business an additional $750 per semester; the University of Northern Iowa is implementing differential tuition identical to ours for its business students. Five of the other 11 business schools in the Big 12 charge differential tuition (up to $1,350 per semester); at least one other is proposing it. |
| 8. Were College of Business students given a chance to comment on this proposal? | Yes. There were meetings, open to all College of Business students and advertised throughout the college, during spring, summer, and fall 2008. Although students were, as expected, wary of tuition or fee increases, they acknowledged the unique funding challenges the College of Business faces and were receptive to the proposed uses of the additional funds. The student Business Council voted 33-2 in favor of supporting the proposed differential tuition. |
| 9. Why is the College of Business pursuing differential tuition when the economy is struggling? | This proposal was underway long before the economic downturn during the last half of 2008. The University of Iowa had already begun charging differential tuition, and the process to approve differential tuition at Iowa State and Northern Iowa had begun as well. The college is mindful of the tuition challenges families face, especially in tough economic times, and is taking steps to ease the burden (see #13 below). |
| 10. Will budget shortfalls at the state and/or university level affect how differential tuition revenue is spent? | Potentially, yes. With budgets likely to be reduced in the next fiscal year, and uncertainty in years to come, it is possible that in the short term, the college will be unable to hire as many new faculty as this proposal outlines. However, as the economy recovers and budgets are fully restored, the college is committed to fulfilling the terms of the proposal as described here. |
| 11. Why is it more expensive to receive an education in business than in other disciplines? |
Not only is there a shortage of qualified faculty at business schools across the country, but business schools are also competing with private industry for those faculty. As you might expect, this drives up faculty salaries. The good news is that, even though business education is more expensive, the benefits outweigh the additional costs. Upon graduation, College of Business graduates earn starting salaries that are at least $4,841 higher than other majors on campus (excluding Engineering, which also pays differential tuition). So you may earn back the cost of your differential tuition in your first year of salary alone. |
| 12. What is the college doing to ease the financial burden on its students? |
The college currently awards more than $180,000 annually in scholarships to its students. As part of Campaign Iowa State: With Pride and Purpose, the college has a fundraising goal of $7.5 million for student scholarships, which will provide nearly $320,000 in annual scholarships. As noted in question #4, 15 percent of the funds raised from differential tuition will go directly toward financial aid for College of Business students. |
| 13. The following are illustrations of differential tuition calculations. These assume a hypothetical university base tuition rate increase of three percent each year. Under that scenario, differential tuition would be calculated as follows: |
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The Iowa State Office of Student Financial Aid has created a website for students called, "Cash Course: Define your finances. Define your future." This convenient site is filled with tools and information to help students make informed financial decisions throughout their college years and into their professional lives. Additional student financial assistance information may be found on the Office of Student Financial Aid website.
