Tuition rising? Not in South Dakota.

State aims to lure youth by offering a break on college costs.

While the nation's public and private colleges keep boosting tuition in a seemingly relentless upward spiral, South Dakota has a different idea.

It's cutting the cost of college for out-of-state residents.

The South Dakota Board of Regents announced last week that, starting next fall, it was slashing tuition for all new out-of-state students by slightly more than half. The change affects prospective students mostly in the eastern half of the United States, since those from neighboring and western states have been paying the lower rate for several years.

The reason for the change is demographics. Like many Plains states, South Dakota faces a dwindling number of children and, thus, high school graduates.

A committee charged with surveying high school enrollment recently told the state's Board of Regents that high school graduation enrollments could drop by as much as 13 percent over the next decade. That, in turn, could reduce the number of South Dakotans entering the state's universities and other post-secondary institutions, which currently have 31,000 students enrolled.

Population challenge

"It's a math problem," says Harvey Jewett, president of the board in Pierre, S.D., "and it's particularly dramatic if you look at South Dakota. The population has gotten older. If over the course of the next five or six years we have a materially smaller student population, it's going to have some impact on our costs."

South Dakota, it turns out, isn't the only state worrying about controlling its costs. Many others - Colorado, Kentucky, and Michigan top the list - are increasing their tuition rates by as much as 17 percent, according to a recent College Board survey of 3,000 schools. But at least two states are hoping that by making attendance more affordable they will draw in talent from other states.

In South Dakota, the cuts mean that first-time out-of-state freshmen will pay $114.60 per credit hour - or an average $3,666 next year - down from $7,763 this year. The cuts will be phased in to include sophomores the following year, juniors the year after that, and so on. In-state rates, which are two-thirds lower, don't change.

Tennessee, meanwhile, is considering a proposal to reduce the nearby out-of-state rate as low as the in-state rate - giving neighboring states total reciprocity.

Since most students settle down within 500 miles of where they attended college, Mr. Jewett says, the hope is that they will not only study in-state, but stay.

"There's a substantial amount of evidence that suggests that where you go to college has a disproportionate amount of impact on where you live after school," says Terry Hartle, an expert on higher education at the American Council of Education in Washington. "South Dakota is one of the states that has a stagnant population as opposed to many of the states in the West and Southwest seeing a rampant growth in population."

In the past, he adds, when public institutions have lowered tuition, "it's been because the state's economy was buzzing and the state government had more money to put into higher education; it wasn't done deliberately to increase out-of-state enrollment. This is a bold, innovative plan and it's certainly worth an effort. But it sounds like South Dakota's got a challenge on its hands."

Across the nation, the increase in tuition costs - not to mention ensuing debt - has the New York-based College Board concerned about access to post-secondary education (see chart).

The cost of a public four-year college education jumped by 7.1 percent from last year to an average $5,491, higher than the 5.9 percent increase at private schools and higher than inflation, the association of 4,700 educational organizations found.

South Dakota boasts a low cost of living, but the average salary is accordingly small - $24,803 in 2002 - with lower salaries in only two states: Montana and North Dakota.

An education deal?

Still, students who filter through South Dakota's public institutions do stand out, Jewett says.

"If you are seeking to be a Nobel laureate in theoretical nuclear physics, we don't have much to offer you," he says. "But South Dakota is always the lowest that defaults on student loans, or on the rare occasion it's almost the lowest. So what is that telling you? People are getting a very good undergraduate education, and they're going out and successfully getting jobs, and they're paying their loans."

At the end of the day, he adds, the state's struggle is the same as others across the Midwest that face dwindling enrollment: "The end game here is not just to maintain numbers in South Dakota, but the economic vitality in South Dakota. And you need a young, working-age population to do that."

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