Squeeze 'em harder, says LAO

Summary section from a recent LAO report:

[This] Brief Analyzes Nonresident Supplemental Tuition Rates at the University of California (UC). 

In addition to the tuition charges other undergraduates pay at UC, nonresident students pay nonresident supplemental tuition (NRST). UC charges the same NRST rate across all nine of its general campuses. In response to legislative interest, we analyzed whether opportunities exist to raise additional NRST revenue. In particular, we focused on opportunities for raising NRST revenue at UC’s three highest‑demand campuses—UC Berkeley, UC Los Angeles (UCLA), and UC San Diego (UCSD).

Several Findings Indicate Higher NRST Rates Could Be Warranted. 

As a university system, UC is unusual in charging the same NRST rate across all its campuses. Other major public university systems charge more at their flagship campus. For example, in 2025‑26, nonresident rates at the flagship University of Michigan, Ann Arbor campus are more than 4.5 times higher than at the Flint campus. Demand from nonresident students also is notably stronger at UC Berkeley, UCLA, and UCSD than at the other UC campuses. These three campuses receive more nonresident applications than the remaining six UC campuses combined, have the lowest admission rates, and enroll the highest shares of nonresident undergraduates. In addition, our UC‑specific research, together with national research on selective universities, indicates that aggregate nonresident enrollment does not decline as NRST rates increase. One reason this might be the case is that families could view a higher sticker price as an indicator of higher quality. Another reason could be that demand for selective universities is so strong and admission rates so low that many families are willing to pay higher NRST rates to secure a coveted enrollment spot.

Recommend Piloting Higher NRST Rates at Highest‑Demand Campuses.

If the Legislature wanted to pursue higher NRST rates, we recommend a four‑year pilot involving UC Berkeley, UCLA, and UCSD. We recommend beginning the pilot in 2027‑28, as UC already has published its NRST rates for 2026‑27. If UC were to raise the NRST rate for 2027‑28 by $6,000 at UC Berkeley, UCLA, and UCSD, compared to an increase of $2,000 at the other UC campuses, we estimate an additional $20 million in NRST revenue would be generated (ramping up to $80 million in year four). This additional revenue could be used to supplement core funds at UC or offset state General Fund in response to a state budget deficit or competing state budget priorities. While the pilot is in place, we recommend UC collect and report data on the impacts of the higher NRST rates at the three selected campuses, including impacts on the composition of the undergraduate nonresident student body.

Full brief at https://lao.ca.gov/reports/2026/5183/2026-27_Budget_Nonresident_Tuition_Rates_at_UC_051226.pdf.