The 2026-27 Budget: Nonresident Tuition Rates at UC

analysis full 2026-27 BUDGET The 2026-27 Budget: Nonresident Tuition Rates at UC GABRIEL PETEK | LEGISLATIVE ANALYST | MAY 2026 SUMMARY 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. www.lao.ca.gov 1 analysis full 2026-27 BUDGET INTRODUCTION Brief Focuses on Undergraduate Nonresident Members are particularly interested in learning Supplemental Tuition Rates. In addition to the whether additional NRST revenue could be mandatory tuition and fees paid by all students at generated in place of state General Fund. In this the University of California (UC), undergraduate brief, we first provide background on nonresident students from other states and countries pay enrollment, tuition, and NRST policies at UC. We nonresident supplemental tuition (NRST). In a then examine various related factors, including recent legislative budget hearing, some members nonresident tuition rates at other universities, the expressed interest in learning what the impact enrollment patterns of nonresident students, and might be of raising NRST rates at the Berkeley, Los the price sensitivity of these students. We end by Angeles, and San Diego campuses—UC campuses providing a couple of recommendations and sharing where student demand is particularly high. a list of other research articles on this topic. BACKGROUND Highest-Demand UC Campuses Enroll The three UC campuses above that cap were Highest Shares of Nonresident Undergraduates. granted the next few years to gradually reduce their As Figure 1 shows, the share of nonresident nonresident enrollment. From 2022-23 through undergraduates at UC systemwide in 2010 (before 2024-25, the shares of nonresident enrollment the Great Recession) was about 6 percent, with at UC Berkeley, UC Los Angeles (UCLA), and UC domestic nonresidents and international students San Diego (UCSD) declined steadily, before leveling enrolling in even shares. In response to the off somewhat in 2025-26, with their nonresident Great Recession, the three highest-demand UC shares now ranging from 19 percent to 20 percent. campuses began enrolling much higher shares Under Current UC Policy, NRST Rates of nonresident students (given these students Increase Each Year. The Board of Regents sets pay much higher tuition rates), with those shares UC’s tuition policies. (Both state law and the increasing two- to three-fold from 2010 to 2015. Regents also have policies establishing residency Following this rise, the Board of Regents in 2017 requirements.) UC’s current tuition policy—the and the state in 2021 adopted policies to limit “Tuition Stability Plan”—took effect in 2022-23 nonresident enrollment at UC. State law includes and has been subsequently revised and extended legislative intent that nonresident students through July 2033. Under this policy, tuition comprise no more than 18 percent of total and NRST rates generally increase annually for undergraduate enrollment at each UC campus. new undergraduate cohorts, while continuing Figure 1 Currently, About One in Five Undergraduates Are Nonresidents at Highest‑Demand Campuses Nonresident Students as a Share of Undergraduate Enrollment, Fall Headcount 2010 2015 2025 Nonresident Nonresident Nonresident domestic International Total domestic International Total domestic International Total Systemwide 3.0% 3.0% 5.9% 5.4% 10.0% 15.4% 7.1% 8.4% 15.5% Berkeley 6.4 6.2 12.7 12.3 12.1 24.4 9.9 9.6 19.5 Los Angeles 5.9 5.6 11.5 10.5 12.5 23.0 11.2 7.7 18.9 San Diego 2.4 3.7 6.1 4.7 16.1 20.9 8.7 11.6 20.3 2 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET undergraduates pay a fixed rate for up to six undergraduate nonresident rate has been as low as academic years. Annual tuition increases for 3 times more and as high as 4.2 times more than undergraduates are typically tied to a three-year the resident rate (Figure 2). rolling average of changes in the California Undergraduate Resident and NRST Rates Consumer Price Index and are capped at 5 percent. Have Similar Historical Trends. Since 2000-01, The Regents may increase NRST by a higher on an average annual basis, resident rates have percentage. For example, in 2024-25, systemwide increased by 6 percent, whereas nonresident rates tuition increased by 3.5 percent, whereas NRST have increased by 5.4 percent. As Figure 3 on increased by 10 percent. the next page shows, the most notable difference Undergraduate NRST Rate Is the Same between the trends is that resident rates were Across All UC Campuses. To date, the Regents somewhat more volatile than nonresident rates have set undergraduate tuition and fee rates that over the first half of the period. The larger percent do not vary by campus. (Campuses have discretion increases in resident rates prior to 2012 reflect the to set campus-specific fees, but these fees tend to fiscal effects of two major economic downturns— comprise a somewhat small share of total tuition the dot-com bust (2001-02) and the Great and fee rates.) The Regents have set the 2026-27 Recession (2008-09). During those downtowns, systemwide undergraduate tuition and fee rate state funding for UC declined, and resident rates at $15,588 for resident students and $54,848 increased more significantly than nonresident for nonresident students (of which $39,270 is rates. Over the second half of the period—a period the NRST rate). All of these rates are 4.4 percent generally of economic expansion—both resident higher than the previous year. In 2026-27, the total and nonresident rates increased more slowly, with undergraduate nonresident rate is about 3.5 times nonresident rates tending to outpace resident rates. higher than the resident rate. Since 2000, the total Figure 2 Nonresident Students Pay Substantially More Than Resident Students UC Academic-Year Undergraduate Rates $60,000 50,000 40,000 30,000 Nonresident Supplemental Tuition 20,000 10,000 Systemwide Tuition and Fees 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13 2014-15 2016-17 2018-19 2020-21 2022-23 2024-25 2026-27 www.lao.ca.gov 3 analysis full 2026-27 BUDGET Figure 3 Trends in Resident and Nonresident Rates Are Similar UC Academic-Year Undergraduate Rates, Percent Change From Previous Year 30% Resident Rates 25 20 15 10 Nonresident Rates 5 -5 2000-01 2002-03 2004-05 2006-07 2008-09 2010-11 2012-13 2014-15 2016-17 2018-19 2020-21 2022-23 2024-25 ANALYSIS UC’s Nonresident Tuition Rates Rank Third other public university systems typically charge Highest Among Public Flagship Universities. higher nonresident rates than other campuses UC’s practice of charging nonresident students within the same system. For example, in 2025-26, more than resident students is common across nonresident rates at the flagship University of the country, with all public university systems in Michigan, Ann Arbor campus are more than 4.5 the country charging nonresident students higher times higher than the nonresident rates at the Flint rates—typically much higher rates—than resident campus. Similarly, nonresident rates at the flagship students. For comparison purposes, Figure 4 University of Wisconsin, Madison campus are more focuses on public flagship campuses in each than double the nonresident rates at the Milwaukee state. As Figure 4 shows, UC charged nonresident and Eau Claire campuses. students about $38,000 more than resident UC’s Nonresident Tuition Rates Are Lower students in 2025-26—ranking it third highest Than Private Peer Universities. Rather than in the country. Only the University of Virginia, comparing itself to only public flagship universities, Charlottesville (charging about $40,000 more) UC typically prefers to compare itself to a set of and University of Michigan, Ann Arbor (charging more selective public and private universities. about $46,000 more) have larger differences As Figure 5 shows, UC’s nonresident rates are between what they charge nonresident and higher than most of the identified public peer resident students. Nationally, the average difference universities but lower than all identified private peer between the two rates in 2025-26 was about universities. In 2025-26, UC’s total nonresident rate $24,000. The smallest difference was about $4,000 was about $53,000, compared to an average of at the University of South Dakota. $45,000 at public peer universities and $67,000 at Public Flagship Campuses Commonly Charge private peer universities. Higher Nonresident Rates. While UC sets a Net Price, However, Tends to Be Lower at uniform undergraduate nonresident rate across Private Peer Universities Than at UC. Although its nine general campuses, flagship campuses in research generally finds that published tuition 4 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET Figure 4 UC Has Third Highest Nonresident Supplemental Tuition Rate in Country Supplemental Nonresident Tuition at Public Flagship Universities in Highest Ten States, 2025-26 Maryland Colorado Indiana Texas Washington Wisconsin North Carolina California Virginia Michigan 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 $50,000 Note: Chart shows the additional amount charged to undergraduate nonresident students compared to undergraduate resident students at each state's public flagship university. The "California" bar shows the nonresident supplemental tuition rate across the UC system, as the same rate is charged at all the UC general campuses. Figure 5 Nonresident Rates at UC Are Higher Than Many Public Peers but Lower Than All Private Peers Academic-Year Nonresident Tuition and Fees, 2025-26 Public Universities SUNY Buffaloa University of Texas (Austin)b University of Illinois (Urbana-Champaign)b University of Minnesota (Twin Cities) University of Wisconsin (Madison)b University of Virginia (Charlottesville )b University of Michigan (Ann Arbor) University of California Private Universities Harvard University University of Pennsylvania MIT Princeton University California Institute of Technology Stanford University Yale University Duke University University of Southern California 10,000 20,000 30,000 40,000 50,000 60,000 70,000 $80,000 a Domestic nonresident students pay $32,466, while international students pay $35,666. b Tuition varies by school or program. The dark bars reflect the range of tuition rates across schools/programs. SUNY = State University of New York and MIT = Massachusetts Institute of Technology. www.lao.ca.gov 5 analysis full 2026-27 BUDGET rates (sticker price) are an important factor campuses combined. As Figure 6 shows, the affecting students’ enrollment decisions, we also three highest-demand campuses also had much examine net price (that is, the total cost of college lower admission rates for nonresident students attendance after accounting for financial aid). While than the other UC campuses (based on fall 2025 private peer universities charge higher tuition rates data). UC Berkeley and UCLA, for example, than UC, they offer more financial aid, such that admitted less than 10 percent of nonresident they have notably lower net prices. The net price applicants, compared to UC Davis admitting paid by undergraduates at private peer universities nearly 60 percent of nonresident applicants. averages about $23,000 for the academic year. The three highest-demand campuses also have (Unfortunately, the available data is not broken the highest nonresident yield rates. Among UC down for resident, domestic nonresident, and campuses, Berkeley has the highest yield rate international students.) By comparison, the net among nonresidents—meaning a relatively high price paid by nonresident undergraduates at UC share of nonresident admits go on to enroll at the averages nearly $68,000 for the academic year. Berkeley campus. Though the net price is lower at private peer Highest-Demand UC Campuses Compete universities, these universities generally have With Private Peers for Nonresident Students. very low admission rates (3 percent to 6 percent), Figure 7 shows that, for admitted domestic meaning many nonresident students might turn to nonresident students, selective private universities other higher-cost university alternatives. (those that admit 50 percent or less of their Enrollment Demand of Nonresident applicants) are the most common destination, Students Varies Significantly Across UC followed by the UC campus that admitted them. Campuses. Despite net price being higher at UC International students, however, are more likely to for many nonresident students, a large number choose the UC campus over a selective private of nonresident students (nearly 75,000) continue university—especially at Berkeley and UCLA. to apply. Moreover, the number of nonresident (Remaining nonresident students typically enroll applicants at UC’s three highest-demand at different public universities within the U.S. or campuses is higher than the remaining six UC remain abroad.) Figure 6 Highest‑Demand Campuses Have Lower Admit Rates and Higher Yield Rates Freshmen, Fall 2025 Applications Admit Rate Yield Ratea Residents Nonresidents Residents Nonresidents Residents Nonresidents Systemwideb 130,896 74,493 77% 65% 42% 22% Berkeley 72,685 54,145 14 8 51 38 Los Angeles 89,350 55,710 10 9 58 31 San Diego 87,574 49,153 25 34 25 14 Davis 68,959 34,029 37 59 21 7 Irvine 86,250 37,973 22 44 26 9 Merced 43,040 6,326 96 81 5 1 Riverside 61,333 9,530 87 84 12 4 Santa Barbara 74,659 35,514 32 51 16 7 Santa Cruz 52,605 13,788 71 78 11 4 a The “yield rate” is the share of admitted students that enrolls at the university. b Reflects number of unique individuals. (Some individuals apply to more than one UC campus.) 6 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET and tuition data Figure 7 from 1994 to 2024, while controlling Nonresident Admits Typically Enroll at UC or Selective Private Universities for certain factors, Enrollment Choice of Students Admitted to High-Demand UC Campuses, Fall 2024 such as financial aid, the admission UC Berkeley UCLA UCSD 100% rate, and the average tuition charges at 80 peer universities.) 60 This UC-specific 40 finding is consistent 20 with broader past research that also has found Domestic International Domestic International Domestic International nonresident students nonresident students nonresident students nonresident students students students enrollment levels are not price Admitting UC Campus Other UC Selective Private Selective Public Other sensitive. Though not price sensitive Past Research Finds Nonresident Enrollment in the aggregate, Levels Do Not Decline as Nonresident Tuition we recognize some nonresident students could be Rates Rise. Existing academic research (a deterred by a higher tuition rate. In the aggregate, selection of which is listed at the end of this however, such a student likely is being replaced brief) finds that higher nonresident tuition rates by another nonresident student willing to pay the are not associated with a decline in the share higher price, reflecting the large pool of nonresident of nonresident undergraduate students at applicants. public universities in the country. That is, higher A Benefit of Differential Tuition Rates Is tuition rates do not appear to deter nonresident Generating More Tuition Revenue. Rather undergraduate students from enrolling. One reason than having a uniform NRST rate that applies this might be the case is that families could view a to all UC campuses, the Regents could charge higher sticker price as an indicator of higher quality, different NRST rates at one or more UC campuses. which in turn could strengthen rather than weaken Differential tuition rates could be structured in demand. Another reason this might be the case is such a way that UC raises more total tuition student demand for selective universities is already revenue. In turn, UC could use this additional tuition so strong and admit rates so low, with many families revenue for its core operations—to cover basic willing to pay a higher rate to gain a coveted spot at cost increases or enhance or expand programs. one of UC’s high-demand campuses. Alternatively, the state could reduce state funding Recent Trends Also Suggest Higher Tuition for UC, such that UC’s core funding increases Rates Do Not Dampen Aggregate Nonresident the same level as it would have without the new Demand at UC. Between fall 2010 and fall 2025, differential tuition rates. Under either scenario, the applications from nonresident students more main benefit is raising more UC tuition revenue and than quadrupled at UC Berkeley and UCLA, while doing so from nonresident students. increasing six-fold at UCSD. These large increases A Concern of Differential NRST Rates Is Their came even as NRST and total nonresident Potential Impact on Nonresident Students. charges rose. (Total nonresident charges rose Setting higher undergraduate NRST rates at certain 58 percent in unadjusted terms and by 4 percent UC campuses could impact the composition of the after adjusting for inflation.) Our own econometric nonresident undergraduate student body at those analysis also finds that a higher NRST rate is not campuses. For example, higher NRST rates would correlated with nonresident enrollment declines at raise the cost for many nonresident students, which UC. (We examined UC undergraduate enrollment could shift enrollment toward wealthier applicants. www.lao.ca.gov 7 analysis full 2026-27 BUDGET RECOMMENDATIONS Recommend Piloting Higher NRST Rate at next three years, the amount of additional revenue the Three Highest-Demand Campuses. We generated would ramp up—reaching about recommend the Legislature request UC to pilot $80 million by year four. This additional revenue an increase to the NRST rate for new nonresident could be used to supplement core funds at UC or undergraduate cohorts at UC Berkeley, UCLA, and replace state General Fund in response to a state UCSD. Though Berkeley and UCLA are notably budget deficit or competing state budget priorities. more selective than UCSD among nonresident (We note that a differential tuition policy could be students, we encourage the Legislature to include enacted regardless of what the Legislature decides UCSD in the pilot, as it could help inform the on UC’s nonresident enrollment levels. Whether possibility for further differentiating NRST rates (for the Legislature decides to lower, maintain, or raise example, subsequently applying a higher rate to nonresident enrollment levels at some or all UC the Irvine campus). Though the pilot could begin campuses, differential tuition rates still could be as early as 2026-27, we recommend beginning structured in a way that generates more revenue it in 2027-28 given UC already has published its compared to uniform tuition rates.) 2026-27 rates. We recommend running the pilot Recommend UC Report Certain Data About for four years, such that the impact on four cohorts Impacts of the Pilot. While the differential tuition of students can be examined. (We recognize that pilot is in place, we recommend the Legislature another option is to have different NRST rates for have UC collect and report data on the impacts of each UC campus based on its selectivity, but we the higher rates at the three selected campuses. think beginning with a two-tier rate structure—a In particular, we recommend UC collect the data higher rate at the most selective UC campuses and to determine whether the higher NRST rates a lower rate at the other UC campuses—makes for dampen enrollment demand among nonresident a reasonable, somewhat simpler pilot.) students, lower yield rates, or raise the household Pilot Would Raise Tens of Millions of Dollars income levels of nonresident students. UC also Over Next Few Years. If the Legislature decides could leverage survey data it already collects to implement the two-tier pilot, one option would from students who decline a UC admission offer. be requesting UC to raise the NRST rate for That existing survey asks students to report 2027-28 by roughly $6,000 at UC Berkeley, UCLA, the primary reason for declining UC admission and UCSD, compared to an increase of roughly (with one response option being “financial about $2,000 at the other UC campuses. (These reasons”). Additionally, that survey asks students rates are 15 percent higher and 5 percent higher, to report where they decided to enroll instead respectively, than the 2026-27 NRST rate.) Based of UC. Upon completion of the four-year pilot, on recent enrollment patterns, this increase would UC could summarize key lessons learned and generate roughly $20 million in additional revenue identify potential future modifications to the NRST in 2027-28. As new cohorts are added over the rate structure. 8 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET REFERENCES Adkisson, R. V. & Peach, J. T. (2008). Millea, M. & Orozco-Aleman, S. (2017). “Non-resident Enrollment and Non-resident Tuition “Estimating Tuition Elasticities of Resident and at Land Grant Colleges and Universities.” Education Non-resident Enrollments at South-Eastern Public Economics, 16(1): 75–88. Universities.” Applied Economics, 49(21): 2027– Curs, B. R., & Jaquette, O. (2017). “Crowded 2040. Out? The Effect of Nonresident Enrollment on Mixon Jr, F. G. & Hsing, Y. (1994). “The Resident Access to Public Research Universities.” Determinants of Out-of-State Enrollments in Educational Evaluation and Policy Analysis, 39(4): Higher Education: A Tobit Analysis.” Economics of 644–669. Education Review, 13(4): 329-335. Horner, O. G., Williams-Wyche, S., & Marsicano, Noorbakhsh, A. & Culp, D. (2002). “The Demand C. (2023). “Out-of-State Tuition Premiums at for Higher Education: Pennsylvania’s Nonresident Public Four-Year Institutions: Trends and Impacts.” Tuition Experience.” Economics of Education Midwestern Higher Education Compact. Review, 21(3): 277–286. Leslie, L. L. & Brinkman, P. T. (1988). The Rizzo, M. J. & Ehrenberg, R. G. (2004). “Resident Economic Value of Higher Education. American and Nonresident Tuition and Enrollment at Flagship Council on Education/Macmillan Series on Higher State Universities.” In C. M. Hoxby (Ed.), College Education. Macmillan Publishing, 866 Third Avenue, Choices: The Economics of Where to Go, When New York, NY 10022. to Go, and How to Pay For It (pp. 303–354). Levine, P. B., Ma, J., & Russell, L. C. (2023). “Do University of Chicago Press/National Bureau of College Applicants Respond to Changes in Sticker Economic Research. Prices Even When They Don’t Matter?” Education Finance and Policy, 18(3), 365-394. www.lao.ca.gov 9 analysis full 2026-27 BUDGET 10 LEGISLATIVE ANALYST’S OFFICE analysis full 2026-27 BUDGET www.lao.ca.gov 11 analysis full 2026-27 BUDGET LAO PUBLICATIONS This report was prepared by Florence Bouvet, and reviewed by Jennifer Pacella and Ross Brown. The Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. To request publications call (916) 445-4656. This report and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. The LAO is located at 925 L Street, Suite 1000, Sacramento, California 95814. 12 LEGISLATIVE ANALYST’S OFFICE