Do tuition discounts for out-of-state students help or hurt USC?

The University of South Carolina and a college oversight board clashed again Thursday over whether out-of-state students are a financial boost or burden for the state’s flagship university.

But the S.C. Commission on Higher Education stopped holding a USC land deal hostage over the tuition discounts, which the school gives out-of-state students.

The commission and some state lawmakers have balked at the $515 million in tuition discounts that USC has offered over the last decade to lure out-of-state students.

Those students still pay higher tuition on average than in-state students, subsidizing the education of S.C. residents while not displacing them at the downtown Columbia school, USC vice president for student affairs Dennis Pruitt said.

But agency commissioners Thursday said they could not square the university’s math.

Halfway through the two-hour meeting, commissioner Kenneth Kirkland requested a whiteboard. When one was found, he jotted USC-provided numbers into a formula and calculated that the strategy actually cost the school more than $23 million last year.

Kirkland’s math, some commissioners said, shattered USC’s argument the discounts do not cost it money and showed S.C. taxpayers are subsidizing the education of out-of-state students.

“Can you explain to the taxpayers of South Carolina why out-of-state students are costing the university $23 million?” commissioner Diane Kuhl asked.

“I cannot,” Pruitt said.

USC spokesman Wes Hickman told the board that Kirkland’s math was off. One of the numbers that Kirkland used – the average cost to educate a student – was from a national study, not specific to USC, he said.

However, that number came from USC.

Hickman said he did not know USC’s cost to educate the average student but pledged to find out.

USC officials told the board the school started offering discounts to out-of-state students in 2002 – responding to fiscal and economic realities in the higher education marketplace. That practice ramped up after the Great Recession as USC sought to offset the loss of state money by enrolling more students, including out-of-state students who pay higher tuition, Pruitt said.

Afterward, USC’s out-of-state enrollment rapidly grew – more than doubling between 2006 and 2015.

Out-of-state tuition now is the school’s No. 1 revenue driver, followed by in-state tuition and then state appropriations, USC chief financial officer Leslie Brunelli said.

Any halt to that strategy of enticing more out-of-state students would have drastic effects, Pruitt said.

The S.C. economy would miss out on $40 million in annual tourism and retail spending by the out-of-state students, he said. USC also would struggle to pay off its construction debt, which is financed more heavily by out-of-state students, he said.

And the new student housing developments popping up around Columbia for those students could collapse, Pruitt said.

Plus, he said, USC would have to raise tuition for in-state residents to make up for the lost revenue.

After the debate over out-of-state students, the board voted unanimously in favor of USC’s $9.4 million bid to buy a 14.6-acre tract of land from the SCANA utility on Assembly Street, south of downtown Columbia.

That proposal had been delayed since June, when the board declined to give it an up-or-down vote until USC officials returned to explain their out-of-state tuition discount strategy.

USC will have to explain that strategy again later this month.

A state Senate committee is holding an Aug. 15 hearing into the issue and has scheduled USC president Harris Pastides to testify.

This story was originally published August 3, 2017 at 4:45 PM with the headline "Do tuition discounts for out-of-state students help or hurt USC?."