4.5% tuition hike likely, report states
OU’s tuition could increase 4.5 percent after fiscal year 2011, a major credit rating agency stated in its assessment of OU’s ability to pay back investors.
Fitch Ratings, one of the top three credit rating agencies along with Standard & Poor’s and Moody’s Investor Service, reported the possible tuition increase in a Jan. 18 report evaluating OU’s credit.
OU officials specified a 4.5 percent increase during conversations with Fitch analysts, said James George, an analyst from the Fitch group.
“That number came from the school, and they have to verify that before we put it out in the press,” George said.
However, during a meeting with students in Walker Tower on Tuesday, OU President David Boren said specific tuition and fee increases won’t be decided until OU’s appropriation from the Oklahoma Legislature is determined.
“It has to be a prediction,” Boren said of Fitch’s statement on OU’s tuition increase. “If I don’t know it, how do they know it?”
Fitch Ratings assessed the $44 million in general revenue bonds issued by the OU Board of Regents, giving them an “AA” rating, the third highest rating that can be given to an institution, meaning there is little risk that OU would not be able to pay back its bonds.
Bonds are similar to loans in that borrowers — OU in this case — sell bonds to investors to finance operations. OU must pay the money back with interest at fixed intervals. Credit rating agencies, such as Fitch, assess the ability of financial institutions to pay back their bonds. Favorable ratings indicate there is a low level of risk for investors to buy bonds from institutions.
The bonds issued by the OU Board of Regents are meant “to fund construction of infrastructure and roads as well as the construction and equipping of a multi-tenant office facility on the Norman campus,” according to Fitch’s report.
The university is planning tuition-rate increases of 4.5 percent after 2011 “due to the non-recurring nature of federal stimulus funds,” Fitch’s summary of OU’s credit stated.
The tuition rate increase was cited as a possible source of revenue for the university to pay back its bonds, George said.
The 2011 fiscal year for OU ends on June 30, so it is likely the tuition increase would be implemented fall 2011, George said. However, he said it also could mean the increase may happen fall 2012.
“We talk about these things and definitely get an idea of when certain things are going to be implemented,” George said. “That doesn’t mean they’re going to happen; that doesn’t mean that they won’t happen. It’s just information we get from [the university], and that’s basically the process we go through.”
Boren said no official decision has been made regarding tuition increases, but he hopes any tuition increase will remain in single digits.
Tuition per credit hour for residents is $122.60, and $470.30 for nonresidents, according to the Bursar office’s website. A 4.5 percent increase for students taking 15 hours per semester would mean an additional $83 in tuition each semester for residents and $317.40 more for nonresidents.
This doesn’t count fee increases. During an OU regents meeting Jan. 27, Boren said he would allow a 10 percent increase in college technology fees because these fees had been frozen for the past two years.
The possible tuition increase comes after a 5.1 percent increase in tuition and fees from the 2009-2010 to the 2010-2011 academic year, according to the Chronicle of Higher Education. Tuition and fees for the 2010-2011 academic year average $7,853.50 for residents and $18,284.50 for nonresidents, according to the Bursar office’s website.