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Business students likely to earn more, so they'll pay more at UAF

Dermot Cole

FAIRBANKS -- Some college diplomas are worth more than others.

Forget, for a moment, the wealth of knowledge gained from the college years or the lasting value of increased understanding and personal satisfaction. MasterCard would tell you those are priceless.

Focus instead on starting salaries. The average for 2013 business graduates is more than $55,000, about $17,000 above that of those holding degrees in the humanities and social sciences, according to the September survey of the National Association for Colleges and Employers.

That wage gap is one reason why the University of Alaska Fairbanks will soon join the growing list of colleges where students will pay more to study business than English or political science.

The cost to students of upper division and graduate management courses is set to rise about 17 percent next fall. The $35 per credit surcharge would raise the cost of completing a four-year bachelor’s degree by about $2,100. The increase for a graduate degree would be about $2,040.

It had long been common practice to charge the same amount for students in all subjects, with some exceptions, but that began to change at many institutions in the 1990s. A 2011 survey by the Cornell Higher Education Research Institute found 143 public institutions with some form of what is generally described as “differential tuition.”

The most common subjects with higher tuition are business, engineering and nursing, the Cornell study found. Across the nation, the average starting salary for engineers is $62,000, so don’t be shocked in future years if the Alaska engineering programs become converts to the surcharge option.

In the Fairbanks business case, the argument for raising the amount collected from students is that enrollment has climbed 70 percent over the last six years and the school would have to cut faculty and staff, reduce classes and eliminate programs without more funds, it says on its website.

One key factor is the cost of hiring strong faculty members, a variable that plays a part in maintaining accreditation.

“To attract the best and brightest we need to pay them a competitive salary which, on average, can be twice as high as faculty in arts and sciences. This is necessary to entice them from the private industry with its seductive six-figure salaries,” the management school says.

Mark Herrmann, dean of the school of management, said the higher charge is “necessary due to the high cost of the faculty needed to sustain programs where graduates have significantly greater employment opportunities and at salaries much higher than the average university student.”

“This model is common across the United States as business schools seek to maintain high-quality, high-cost programs,” he wrote in a summary of the surcharge plan Oct. 3.

The increased fees would bring in $326,152 a year, Herrmann wrote.

With the additional revenue, "more highly-qualified faculty will be retained and hired. There will be more class sections offered and more classes available online,” the school says on its website.

The UA Board of Regents took up the issue in September, concluding that university administrators should make the call on the surcharge plan. UA President Pat Gamble and UAF Chancellor Brian Rogers approved it this month.

Meanwhile, the regents are to take up a plan to raise tuition for business students and everyone else by $6 a credit when they meet Nov. 6 in Anchorage. The 2014-15 increase would be $180 a year for a student taking 15 credits. For graduate students, the increase would be $12 per credit.

Dermot Cole can be reached at dermot(at)alaskadispatch.com. Follow him on Twitter at @DermotMCole.