The SJ Mercury News reported of a rising trickle of California students looking for an education away from the Golden State. Many take advantage of the Western Undregraduate Exchange run out of the University of Colorado, a program which allows students from the Western States to enroll at reduced (out-of-state) tution at a number of institutions outside their state of residence. But many students just plain look for an education elsewhere: the article quotes admission officers from Duke to University of Washington seeing the largest number of California applicants ever. (Oregon apparently does not take California applicants throught the WUE program for fear of being swamped.)
With the increased fees on their way to Regental approval, we can only expect the numbers to grow. When out-of-state tuition at a respectable institution is lower than in-state fees at UC, the incentives to look elsewhere become pretty strong, especially combined with lower costs for room and board. The trickle of students looking elsewhere might even turn into a rushing river if, as some predict, higher education will be the next bubble to burst.
UCOP's and the Regents' strategy of making up for lost state revenue by raising fees might hit diminishing marginal returns if it drives more and more students out of UC. For each students who elects to attend school out of state, not only does UC lose the fees the student would have paid, it would also lose the (ever decreasing) FTE money handed down from the state.