Last year's price hike was not the first for the MET program. In fact, the cost of enrolling in MET has increased dramatically since the program was unveiled in 1986. Initially, MET's cost was estimated at $2,400, [25] but by the time the program got underway in 1988, enrollment was pegged at $6,756, a 182 percent increase.

In August 1989, officials announced that MET's enrollment cost would be increased another 13 percent, from $6,756 to $7,664 for a newborn. As was noted, MET's enrollment cost was increased another $176, an extra three percent from the original 1989 cost, in October.

The public policy implications of these price increases are fairly obvious. To the extent that MET's enrollment cost is increased access for lower-income and middle-class residents is reduced. Rising MET charges are making it more difficult for the program to address the problem of ever-higher tuition costs for Michigan's middle income families.

Officials attribute these price hikes to higher than anticipated tuition increases at state universities. Recall that one of MET's crucial assumptions is that tuition will increase at an average annual rate of only 7.3 percent. If tuition increases at a greater rate than the rate assumed by state officials, they must increase MET's enrollment cost or achieve a greater rate of return to maintain the program's solvency.

How accurate have officials been at estimating tuition? In 1988, MET's first year, tuition increases at Michigan's 15 major public universities averaged 10.02 percent, ranging from 7.8 to 12.94 percent. [26] In 1989, tuition increases at those schools exceeded MET projections for a second consecutive year. Tuition rose at rates of 8.9-9.3 percent at the 15 schools, averaging about 9.1 percent. [27]

Tuition increased at an average annual rate of 8.9 percent during the 10-year period ending in 1987. [28] In each of these three examples, tuition increased at a percentage rate greater than the MET projection of 7.3 percent.

At the same time, Michigan college tuition costs have increased at a percentage rate greater thanthe nation's inflation rate. This period, however, coincides with a sustained period of low inflation. [29]

Table 1

Year Tuition Increase CPI
     
1978 8%

8%

1979 9%

12%

1980 10%

13%

1981 15%

11%

1982 17%

5%

1983 15%

3%

1984 9%

4%

1985 0%

3%

1986 1%

2%

1987 5%

4%

Historically, the MET assumption of an average 7.3 percent increase in tuition costs appears implausible, given periods of low or high inflation.