Junjie Guo and Ananth Seshadri
Executive Summary:
- Today, the Universities of Wisconsin Board of Regents is scheduled to vote on raising UW–Madison’s resident undergraduate tuition by 2 percent (about $210), the fourth increase since a decade-long freeze ended in 2023. The debate treats this as a hardship; the data show the opposite. The resident price is too low, a legacy of political price control rather than market value.
- A UW–Madison degree is both an investment good, returning roughly $760,000 over a resident’s career, and a high-amenity consumption good that families actively shop for. Politics nonetheless prices it as a bargain.
- At $12,166, resident tuition and fees are the 12th-lowest of the 38 public members of the Association of American Universities (AAU) and well below the median of $14,726, even though U.S. News ranks UW–Madison 12th among public universities. Its research peers charge residents 51 to 73 percent more.
- Nonresident tuition of $44,191 carries no taxpayer subsidy and is the closest available market price; residents pay just 28 cents on the dollar, the fourth-lowest share in the group and a discount near $32,000 a year. Willingness to pay is revealed next door: about 3,200 Minnesota students pay $5,400 more than Wisconsin residents to enroll.
- The low price is self-inflicted: a 2013–2022 freeze held resident tuition flat while peers raised theirs, so UW–Madison’s rose just 17 percent over 13 years, barely half the peer median and a near-20 percent real cut after inflation.
- The Wisconsin taxpayer is not stingy: UW–Madison’s state appropriations per student exceed the Big Ten and AAU-public medians.
- Because the return is large and private, a below-market price is regressive, subsidizing well-off families at the expense of taxpayers whose children do not attend. The remedy is to let market forces set resident tuition: benchmark it to peers and the nonresident price, index it to inflation, and pair higher tuition with need-based aid.