The University Board of Trustees, citing its ongoing commitment to bring faculty pay closer in line with national competitors, approved a range of campus-based tuition and fee recommendations on Jan. 25 aimed at reaching that elusive goal.

The trustees’ recommendations, which will be voted on by the UNC Board of Governors (BOG) later this month, call for a $250 increase for in-state, undergraduate tuition and a $1,250 increase for out-of-state undergraduates. Graduate students would pay another $500. Those levels followed the recommendation of Chancellor James Moeser. Whatever the BOG approves must later be approved by the General Assembly to be effective for the 2007-08 academic year.

Trustees deliberated on the increases in the presence of about 200 students who stood in silent protest, with a few wearing clothes or carrying placards that screamed for attention. Among this latter group were male students wearing nothing but bath towels and showing signs such as “Tuition hikes keep me pantless” to explain the point.

Trustees listened to students — many of them out-of-state students who would be subject to the $1,250 increase — talk about the financial burden they and their parents face sending them to Carolina. Some spoke about how they have to carry extra jobs to meet their expenses — jobs that keep them from fully participating and contributing to campus life, which was a major reason why they had wanted to come to Chapel Hill in the first place.

The $1,000 gap between in-state and out-of-state increases was shaped by a policy proposed by UNC President Erskine Bowles and approved by the BOG last fall to cap tuition and fee increases for in-state undergraduates at 6.5 percent annually over the next four years.

Trustees stayed below that 6.5 percent threshold this year with the $250 tuition increases, coupled with proposed fee increases of $56.48.

Moeser, in his written recommendations to the board, said he favored a clean plan for moderate annual increases for out-of-state students ranging from $1,000 to $1,250 per year over the next four years. Such a plan should be reviewed annually to monitor any negative impact on such quality indicators as applications and student yield rates, but the overall trajectory of increases would be laid out to provide students and parents with a predictable roadmap of what they would be asked to pay. Student leaders have cited the need for predictability in recent years.

Moeser said an increase of $1,250 for the next four years would raise out-of-state tuition by $5,000 — increases that could produce the cumulative effect that trustees have been seeking to make progress moving out-of-state tuition toward the 75th percentile of Carolina’s public university peers.

Tuition and fees for out-of-state undergraduates now stands at $19,681, roughly $5,000 below the amount charged out-of-state students attending peer institutions such as the universities of Virginia and California at Berkeley.

But Student Body President James Allred, who voted against the increase, warned of the dangers of alienating out-of-state students whose presence here enhances the quality of education for all students.

He pointed to Kiplinger’s Personal Finance Magazine, which for the sixth straight year recently ranked Carolina as the best value in the United States among public universities. That ranking, he argued, would be placed at risk with a tuition hike so high for out-of-state students. He offered a counter proposal for a $500 increase for non-resident students that most members of the Tuition and Fee Advisory Task Force, including faculty members, had favored.

“Being the best value in higher education gives us a competitive edge and increases our applicant pool,” he said. “If we follow the $1,250 course, we will lose that ranking. … We do not want to be remembered as the board that sold our reputation as America’s best value.”

Trustee Chair Nelson Schwab, in his opening remarks, pointed to the Kiplinger’s ranking as well to bolster the argument that the trustees’ tuition policies have kept academic quality and affordability in balance. Schwab and other trustees further argued that the tuition increases at Carolina, substantial though they may appear to students, have not kept pace with the increases that similar public universities have approved.

Karol Mason, chair of the Audit and Finance Committee that initially approved the increases suggested by Moeser and then approved by the full board, said the trustees have strived to strike a balance between protecting access to students regardless of their family income, while at the same time, preserving the quality of education they will receive once they arrive.

“We’ve seen studies that our faculty are not even at 50 percent of what their peer sets earn,” Mason said. “We are not making up ground.”

Even though the tuition and fee advisory board targeted about $4 million for faculty salaries, it is far short of what is needed or will be needed in the years ahead. “I understand this is not without sacrifice by the out-of-state students, but we are committed to making sure you get the quality of education you came here to get,” Mason said.

Steve Farmer, associative provost and director of undergraduate admissions, said both Mason and Allred made valid observations.

Allred was correct, Farmer said, when he cited a recent pricing study by a consultant that showed the University could see a negative impact in the quality and diversity of the out-of-state applicant pool if Carolina’s tuition costs increase faster than those of its competitors.

At the same time, Mason was right when she said that Carolina’s costs have not increased at that faster rate. What matters, Farmer said, is not the absolute number of an increase, but how it compares with increases imposed by competitors. On that score, Carolina’s increases have been smaller than those imposed by its competitors, which are a different group of campuses than just top public peers. Those include regional and state universities as well as privates. Correspondingly, Farmer said, “our yield graph has actually increased among all groups and the quality of applications from out of state have improved.”

Trustee Paul Fulton, while pushing for a $1,500 increase instead of $1,250 for out-of-state tuition, said that competing institutions are increasing their rates at a faster rate than Carolina’s. The only way to catch up, he argued, is to speed up through increases that match or exceed what other institutions are doing.

Fulton said it is not possible to maintain a great faculty while paying them below the 50th percentile of peer campuses. Further, he said, there is no evidence that the tuition increases for out-of-state students have affected yield rates. “We still have a long way to go,” Fulton said.

Some students argued that it was not the neediest students, because of programs like the Carolina Covenant, who were being priced out of college, but students from middle-income families that earn too much money to qualify for need-based aid but not enough to bear increasing tuition costs without real hardship.

The nationally recognized Carolina Covenant program, which began three years ago, allows students from low-income families to graduate from Carolina debt-free through a combination of grants and work-study. More than two dozen other universities have used UNC’s program as a model to launch their own.

This year’s campus-based tuition proposal, as in the past, calls for setting aside 35 percent of all resulting revenues for need-based aid. (The other funds will go for faculty salaries and a $400 to the minimum stipend base for graduate teaching assistants.)

Shirley Ort, associate provost and director of scholarships and student aid, told trustees, “Your commitment to need-based aid has been bedrock and of fundamental importance to in-state and out-of-state students.”

Still, Ort said she shared concerns expressed by some students from those middle-income families making above $55,000 who do qualify for need-based aid. It is a population that her office is watching closely, she said.

“There are a number of students and families who are feeling that pinch in the middle,” Ort said. Yet, there is no hard evidence to show that tuition increases have caused middle-income students to be underrepresented within the current student population. Last fall, for instance, Ort reviewed a report with the trustees on the parental income for freshmen in the 2005-06 class that showed a fairly even distribution by family income, with 18.4 percent of students coming from families with an income at $50,000 or below; 33 percent coming from families making $50,000 to $100,000; 32.8 percent coming from families making $100,000 to $200,000; and 15.8 percent coming from families making $200,000 or more.

The number of need-based aid recipients, the 2005 report also showed, has risen from 4,155 in 1999 to 5,563 in 2004. The average parental income for all recipients with need was $53,410, the 2005 report said, while the average family income for out-of-state students in 2005 was above $130,000.