On Feb. 4, the state Board of Regents voted unanimously to rescind the $100 surcharge that all University of Northern Iowa students paid for the spring semester. This decision is the contingent on Governor Chet Culver’s fiscal year 2011 budget, which includes a restoration of $30.4 million to Iowa’s public universities.
The surcharge had generated $5.9 million for the three universities, which in light of the $60 million the colleges lost in the 10 percent across-the-board budget cut implemented in October 2009, was arguably a good thing for the three schools.
While students at all three colleges have been affected by the surcharge, fewer class offerings, larger class sizes and other reorganizations, the refunded surcharge may not necessarily be the best decision for students and universities.
An additional $30.4 million for the next fiscal year seems like a lot, but that still means the universities lost a net of $29.6 million in the fiscal years 2010 and 2011. That means that the $5.9 million in revenue is still necessary, as students will continue to face reductions in class sizes, increased class offerings and other student services.
Students have likely already budgeted for the $100 surcharge and can, thus, live without the return of the funds. Since it was, supposedly, a one-time charge, then it might be best if the universities continued to use that money to make up for the money lost by budget cuts.
Many students would likely rather be able to get into the needed and wanted classes taught by excellent, high-quality faculty at a university that they pay thousands of dollars to attend than get a meager refund at some unknown point in the future. For an in-state resident, that $100 is less than 1 percent of the money paid for tuition, fees, housing arrangements and textbooks over the past year anyway.
It seems only obvious to pay an additional less than 1 percent of the money students pay anyway for the hopes of keeping qualified staff and faculty employed and continued access to wanted and needed classes and services; $100 is just chump change and the benefits students receive in return could be great. Students take a lot of those offerings for granted, but once they’re gone – once excellent faculty leave to find better employment opportunities at organizations that don’t cut their salary – students will wish that the universities had kept the money.
Though, if they insist on refunding the money, then they should also insist on the return of the full amount lent. The return of the $100 is not the same amount of money students paid in real terms. $100 today is not the same amount as $100 a year from now. Since the money is likely going to be refunded, it can essentially be thought of as a loan to the universities.
If the interest one could get on a similar loan was 3 percent, as is a similar interest rate on a five-year loan Wells Fargo makes, and the $100 is returned one year from the time it was collected, that $100 is now only worth $97. To make the amount refunded the same as the amount students paid, the universities should refund $103 instead of $100. So if the state Board of Regents is going to insist on paying back the funds, even as students watch the services they came to the university for in the first place disappear, then it should at least use basic time value of money skills, learned in any introductory-level college finance course, and pay back the correct amount.
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