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Tennessee Tuition Modeling Analysis

Summary

The Tennessee Higher Education Commission (THEC) coordinates all of the state’s public universities, community colleges, and colleges of applied technology. It is also charged with setting tuition guidelines for Tennessee’s public higher education institutions. THEC sought NCHEMS’ assistance in reviewing and revising the methodology it uses to set those guidelines, which take the form of annual limits on tuition increases.

NCHEMS is analyzing institutional finances in the context of tuition prices to identify areas where financing policies may be falling short in terms of affordability for students and/or adequate funding for institutions. We will then identify which of these areas can be addressed by tuition policy and make recommendations for changes.

Topics Approach Impacts

Topics

• Tuition-Setting Policy – Reviewing and revising the methodology for setting annual tuition increase limits.
• Affordability – Assessing how tuition policies impact students’ ability to afford higher education.
• Institutional Finance – Analyzing the financial health of public higher education institutions.
• Higher Education Governance – Supporting the Tennessee Higher Education Commission’s role in coordinating public institutions and setting statewide policies.

Approach

We begin by approaching this project conceptually. We will first identify the role of tuition policy in the context of Tennessee’s statewide goals and priorities for higher education. Raising or lowering tuition impacts both institutional finances and student affordability. In-state undergraduate tuition also, as one among several sources of revenue, necessarily interacts with out-of-state and graduate tuition, institutional scholarships, state appropriations, and state financial aid. We start this project by understanding these interactions as well as the goals and values THEC would like to advance through its tuition policy.

Next, we will analyze data on several different topics:

  1. Student affordability, including published tuition and costs of attendance as well as actual student charges, scholarships, and financial aid, disaggregated by several student characteristics, including family income. We will also be looking at differences between in-state and out-of-state tuition, and between undergraduate and graduate tuition.
  2. Enrollment disaggregated by a number of student characteristics.
  3. Institutional Revenue from state, student, and scholarship/financial aid sources, as well as total revenue and expenses.
  4. Institutional financial health, as measured by the ratios that comprise the Composite Financial Index.

Impacts

THEC plans to use NCHEMS’ work to adjust its process for setting limits on tuition increases. This may include considering additional data points when setting those limits and/or setting different limits for different institutions.

These changes could impact tuition rates for the 2026-27 academic year.