This post is part of an occasional series examining how California can learn from policies in other states.
California’s public universities have a volatile tuition history. Stretches without increases are followed by sharp tuition hikes. The most recent increases in 2008—during the Great Recession—followed a pattern seen throughout the US: recessions generally cause states to allocate less money to their public universities, and the universities respond to the lost revenue by increasing tuition. Other states with similar tuition volatility have enacted policies to make tuition more predictable for students and their families.
Policy: Illinois Undergraduate Guaranteed Tuition Program
Since 2004, Illinois law has guaranteed that students who enroll in any of the state’s public universities pay the same tuition for four years. Any tuition increases that occur during those four years affect only the new class of freshmen. This allows students and their families to plan for the four years of college financially. But the policy covers only tuition—so students are still subject to yearly increases in other costs, such as room and board, other fees, and books. These additional expenses represent a large portion of the overall cost of college but are generally less volatile than tuition.
How does guaranteed tuition in Illinois compare to year-to-year tuition in California? A University of Illinois Urbana–Champaign student starting in 2008 and finishing in four years knew in advance that tuition would be $9,242 for all four years, leaving the student with an overall bill of $36,968. For an incoming UC Berkeley student, tuition was a relatively low $6,262 in 2008, but that student did not know that tuition would increase 79% by the fourth year and would add up to more than $34,000.
Policy Impact
Institutions that guarantee the same tuition for four years risk bearing the cost of inflation and other external factors (such as a reductions in state funding). This risk could be handled in many ways, including dramatically increasing tuition for the newest class of students, accepting more out-of-state students (who pay much higher tuition), or setting tuition at a higher level than necessary in the first year of a student’s enrollment. In fact, a recent study suggests that colleges affected by the Illinois guaranteed tuition law have raised tuition for incoming students by 26% to 30%—or about $1,500. This has resulted in students paying about 7% more tuition on average than they would have paid without the policy. In short, these students may have traded affordability for predictability.
Lessons for California
A similar policy in California would make tuition predictable for students, but public universities would still be at the mercy of the state budget process, recessions, inflation, and other factors. The universities would have to plan very carefully or risk not having enough revenue. The current practice of setting tuition year to year may allow the state’s universities to be more flexible and responsive to changes in revenue. This practice makes tuition volatile, but it may offer students a cheaper degree.
Visit the PPIC Higher Education Center
But there’s a chance the policy could limit degree production. According to our research, students who begin their postsecondary career at a four-year college are much more likely than those who enroll at a community college to earn a bachelor’s degree, even when controlling for student characteristics. For example, students from low-income families who begin at a four-year college are, on average, two to three times more likely to finish their bachelor’s degree, regardless of their high school GPA. 
Our “closing-the-gap” scenario charts a course to producing 4.2 million bachelor’s degrees over the next 15 years. In this scenario, the total number of bachelor’s degrees awarded in 2029–30 would be 60 percent higher than in the baseline scenario—and it would be 72 percent higher than the number of degrees awarded in 2014–15. Such dramatic increases are not entirely without precedent. Between 2002–03 and 2014–15, the annual number of bachelor’s degrees awarded by California’s public and private universities increased almost 50 percent. Gains in earlier periods were even more impressive. For example, between 1964–65 and 1979–80 the number of bachelor’s degrees awarded at CSU increased 95 percent.
CSU will account for most of the increase in degrees awarded over the entire projection period—it will award 481,000 additional degrees, compared to UC’s increase of 251,000. This is both because CSU is a larger institution, enrolling many more students than UC, and because CSU has much more room for improvement in graduation rates. Private nonprofit colleges would also play an important role, adding an additional 206,000 degrees. Other additional sources, such as private for-profit colleges, online degree programs, and bachelor’s degrees awarded by community colleges, will also need to play a role (see Table 1).
Last year, President Obama proposed legislation entitled America’s College Promise, which would have provided federal funding to states to make two years of community college free to academically eligible, first-time students. However, Congress blocked this program, citing the $79.7 billion price tag. Additionally, the program drew criticism from a range of stakeholders. 
These changes in the program benefit states with low tuition. States will receive a payment for each eligible student equal to 75% of the national average of community college tuition. If a state’s tuition is below the national average—as California’s is—the additional funding may be used for other higher education purposes. Given that California’s tuition is low but its living expenses are high, this provision would allow the state to direct the extra funding—about $1,000 per eligible student—toward low-income students to help pay for books, transportation, housing, food, and other necessities. This extra funding could help low-income students in community colleges and at public four-year colleges afford the true cost of attending college.
The history of tuition increases at UC and CSU shows that periods of low or no tuition growth are often followed by large spikes in growth, most recently in response to 
It is impossible to predict when the next recession will hit or what it will do to state revenues and higher education support. Steady increases could provide a cushion for universities if a drop in state funding occurs, and may allow them to keep to their planned tuition increases—but that depends on how the legislature responds to increases in tuition and the next recession.