HD74 - Special Report on the Initial Study of the Impact of Non-Resident Graduate Tuition Waivers


Executive Summary:
The 2005 Virginia Appropriation Act (Item 4-2.01) directs the State Council of Higher Education for Virginia (SCHEV) to report on "nonresident tuition waivers, including how waivers contribute to the institutions ability to attract and retain research funding and an analysis of the return on investment for the institutions and the Commonwealth through the use of these waivers." Specifically, the General Assembly proposed a policy to provide nonresident tuition waivers to out-of-state students to enhance recruitment and increase the number of nonresident students who remain in the Commonwealth after graduation. The General Assembly charged SCHEV with investigating the return on investment from current nonresident tuition waivers on student residency.

Many public universities including institutions in the Commonwealth of Virginia seek to enroll the most competitive students in their graduate programs. Nonresident tuition waivers provide a financial incentive to attract out-of-state students to Virginia's graduate programs. Virginia's universities have received national attention for their research endeavors. Further, to maintain institutional and state competitiveness in a technologically driven economy requires sustained investment in research based enterprises.

In its 2003 Strategic Plan, SCHEV identified as a priority the goal of strengthening Virginia's academic research capacities to improve the state's leadership position in a growing technologically-driven economy. To advance this goal the General Assembly instructed SCHEV to develop a set of state policies to promote collaboration between the state's academic institutions and the business community. Enhancing research collaboration between the two sectors is tied to state investments in human capital.

Human capital is essential to any developing research enterprise and the lack of consistent investment in human capital, particularly graduate education is seen as a barrier to improving the research capabilities of the state. The popularity of ranking systems to determine an institution's standing vis-à-vis a competitor has enhanced the profile of public universities. In turn, public universities including Virginia institutions, compete in the same applicant pool for students. The ability to attract top graduate students ensures continued growth in the best academic research projects. Colleges and universities value attracting the best students to their programs. However, retaining these graduates in Virginia is of critical importance to the Commonwealth, particularly through tax revenue.

A student who graduates from an institution in the Commonwealth becomes a potential partner for Virginia's businesses, government agencies and non-profit enterprises. Should these graduates leave the Commonwealth for other states, Virginia loses the potential entrepreneurial and economic benefits of these students. In addressing the issue of retaining nonresident students, the Virginia General Assembly enacted as policy the use of nonresident tuition waivers to create more opportunities for institutions to grant in-state tuition rates to graduate students. Research-based entrepreneurship figures largely in the public policy arena because of its benefit to state economic statistics. Presumably, the more monetary funds a state can invest in research and development and human capital, the greater advantage economically a state and its institutions benefit.