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Ratings agency Moody's Investors Service applauded a new University of California, Berkeley proposal to give each UC campus more autonomy, particularly when it comes to setting tuition rates.

Because its seats are so coveted, Berkeley has wanted to charge higher tuition and admit more out-of-state students than other campuses. The school's Center for Studies in Higher Education released a report last month that suggests giving the system's 10 schools greater ability to set policies that fit the "uniqueness of individual campuses."

As we reported today, Berkeley has moved aggressively to admit more non-resident students, who pay a nearly $23,000 premium on top of full tuition, and fewer California residents than the school did prior to 2010.

It is far from clear that UC Regents would consider giving up power to set tuition or admissions policies. And student groups say the campuses have already moved too far toward privatization in the wake of state budget cuts.

But Moody's said the latest proposal "would be a credit positive for UC because the system's leading campuses could better utilize their market potential to generate new student revenues and offset continuing reductions in state support." The ratings agency said the UC system has "considerable untapped pricing power."

The plan might bolster the schools' credit ratings, but not without a cost. Moody's notes, "If the proposal is implemented, the university would be able to command much higher tuition for resident and nonresident students seeking to study at a top research school."


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