A 'Faustian Bargain' to Attract Out-of-State Students

Colorado could soon pass a law that would effectively allow public colleges and universities to admit more out-of-state students—if they also recruit more high-achieving state residents.

Colorado law currently allows no more than 45 percent of each public institution’s incoming freshmen to come from out of state. House Bill 96—passed by both the House and Senate and now awaiting the governor’s signature—won’t literally increase that cap, but it would raise the limit on the number of in-state students who, by virtue of their status as “Colorado Scholars,” can be counted twice in institutions’ residency calculations, thereby making room for more out-of-state students.

The Colorado Scholars Program applies to state residents who qualify for a specific merit scholarship of $2,500—and who, crucially, count as two in-state students in the calculations that determine whether institutions are in compliance with the nonresident limit. Right now, only 8 percent of Colorado Scholars admitted in any incoming class can double count toward the in-state resident number; the new bill would nearly double that, to 15 percent, creating more space for out-of-state students than admitting in-state students who didn’t qualify for the program would.

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Angie Paccione, executive director of the Colorado Department of Higher Education (DHE), said the bill is about more than increasing tuition revenue for schools with high out-of-state demand; it’s also intended to keep Colorado’s best and brightest high school students from leaving. In 2020, nearly a quarter of the state’s high school graduates who went on to pursue a degree did so out of state—5 percent more than in 2009, according to data from the Colorado DHE.

Raising the cap on scholars program recipients, Paccione hopes, will incentivize institutions to aggressively recruit more high-achieving Colorado residents in order to raise the threshold for out-of-state students.

“It’s a war for enrollment right now, and we want to put an end to the brain drain we’re seeing,” Paccione said. “We’ve seen in-state enrollment decline, and we’re trying to shore it up … This is one way to do that.”

Tom Harnisch, vice president for government relations at the State Higher Education Executive Officers Association (SHEEO), said Colorado’s efforts to make more room for nonresidents at public institutions follows a general trend, especially in states facing demographic declines that also have high demand from out-of-state applicants, like Wisconsin and North Carolina.

“There are very few states with caps on out-of-state students, and in those states there has been a movement to try and loosen them,” he said. “It’s really an issue in states with popular, well-known public flagships” like the University of Colorado at Boulder—which is pushing up against its state-imposed limits. The university’s newest incoming freshman class was made up of 42 percent out-of-state students, just three percentage points below the cap.

All About Boulder

The bill would apply to all Colorado public institutions, but experts say it would only be meaningful for two: Boulder, the state’s public flagship, and the Colorado School of Mines.

Boulder, an R-1 institution located in prime skiing country, has “always been a destination for students from other states,” Harnisch said. Mines, a small but elite engineering university, boasts some of the top energy programs in the country; enrollment there has increased by almost 40 percent since 2010, according to Colorado DHE data.

In total, only 18 percent of undergraduate students attending four-year public universities in Colorado are nonresidents; at Boulder and Mines, they make up over 35 percent of the student population, according to DHE data.

And that number is growing, particularly at Boulder. The new bill would give the institution some breathing room.

“We’ve been calling it the CU bill, because it’s really about Boulder,” Paccione said. “We don’t want CU to become primarily nonresident; it used to be primarily Colorado students, and that’s been changing. But they’re also the only ones with a significant waiting list of out-of-state students, and that’s money sitting on the table right now that could really benefit the institution.”

Colorado State University, in Fort Collins, also boasts a sizable proportion of out-of-state students—about 27 percent in 2021—but for now the bill wouldn’t have much impact there. That’s because Boulder and Mines are two of only three schools that enrolled any Colorado Scholars at all since 2019; the other is Metropolitan State University of Denver, which saw its last class of Scholars graduate in 2021.

Ken McConnellogue, vice president of communications for the University of Colorado (CU) system—of which Boulder is the flagship—told Inside Higher Ed that “the number of nonresident students is not projected to grow but remain in line with the prior year incoming class.”

Cecelia Orphan, an associate professor of higher education at the University of Denver, said even if that were true, the bill would set Boulder up for future expansion of its nonresident student body—and potentially bring it one step closer to securing an end to the state-imposed cap on out-of-state students. She sees House Bill 96 as an incremental victory in a pitched battle between the CU system and state lawmakers reluctant to look like they’re rolling out the welcome mat for out-of-state students at the expense of Colorado taxpayers.

“The Legislature has really held this line that you can only have a certain number of out-of-state students … but Boulder has a strong lobbying presence in the state and has been pushing for that to be removed,” Orphan said. “I’m guessing they got creative and are trying to work a different angle. It’s certainly a more politically palatable approach than just raising the cap.”

Colorado’s ‘Very Complicated’ Residency Calculus

Paccione acknowledged that the solution is confusing, further complicating a calculus that effectively obfuscates the true ratio of in-state to out-of-state students. If the bill is signed, Paccione admitted that it could even lead to a situation at institutions like Boulder where out-of-state students outnumber residents in real numbers but still technically fall below the 45 percent threshold.

Double counting Colorado Scholars isn’t the only wrench in the works of the state’s residency numbers. There is also a provision currently in effect that excludes all international students from being counted as part of the out-of-state population—an exemption that could significantly skew data at institutions with international appeal like Boulder and Mines. Another addendum—a provision allowing institutions to count Peace Corps volunteers as in-state students even if they’re nonresidents—was introduced in the new bill.

Harnisch said Colorado is fairly unique in its student residency calculations; he couldn’t think of another state that double counted students for any reason when collecting data.

Michael Vente, director of research for the Colorado DHE, said these special calculations make collecting and tweaking the state’s residency data “one of the most complex” parts of his job.

“We’re doing our best to just follow and interpret the statutes as they’ve been written,” he said. “It can get very complicated based on the carve outs, exceptions and double counting.”

Will Underserved Students Be Left Behind?

Orphan said the slow but sure push for more out-of-state students is part of a years-long balancing act, wherein Colorado’s higher ed institutions try to offset a lack of public funding by seeking revenue from external sources even as they try to provide more public services to residents.

Out of all 50 states, Colorado provides the second-lowest amount of financial support to public higher education, according to the latest SHEEO data.

“Colorado is a state of Faustian bargains in policy and funding for higher ed,” Orphan said. “What that bargain could mean is, eventually, Colorado residents might have to compete with out-of-state students for spots at our best colleges.”

Paccione said the new bill wouldn’t push out residents.

“This doesn’t mean less room for in-state students,” she said. “Out-of-state students pay a sizable amount of tuition. What that does is that extra tuition helps to fund the in-state students.”

But some are concerned that by trading out-of-state slots for merit scholarship recipients—instead of for students who qualify for Pell Grants or significant financial aid—the state is prioritizing not necessarily the best Colorado students, but the most privileged.

“Merit-based scholarships do typically go to wealthier students, so a lot of these merit-based programs are seen as perpetuating privilege,” Harnisch said. “A lot of people think a better use of taxpayer money would be to focus on need-based aid to bring in students who wouldn’t otherwise go to college.”

Orphan is one of those people. She said that Colorado’s focus shouldn’t be on allowing institutions like Boulder to usher in more out-of-state students, but on making public college more accessible to the state’s marginalized and underserved, who she says have been systemically left behind.

“If we were doing a great job of recruiting Colorado students, making sure they’re prepared through their K-12 education, making college affordable and really had tapped the in-state market dry, then I’d say yes, it’s time to turn to out-of-state applicants,” Orphan said. “But that is not the case.”