The University of Minnesota is now cheapest 4-year option for state's poorest undergrads. Other students help foot the bill.
Departing University of Minnesota President Robert Bruininks calls it one of his proudest achievements: The state's flagship campus in the Twin Cities, which serves 50,000 students, has done a better job than most across the country at steering scholarships to its poorest undergraduates.
Tuition has doubled since Bruininks became president in 2002 -- but not for low-income students. In fact, its grants make it their cheapest four-year school in the state, new data show.
As Bruininks prepares to leave office this week, that feat is facing growing pressure.
Middle-income and affluent families are funding much of the financial aid for needy students through their own tuition. Legislators and regents are asking: Is that fair? Policy experts and deans are wondering: Is that sustainable? At a legislative hearing earlier this year, Sen. Ron Latz, DFL-St. Louis Park, called it "not a healthy model" and "a very unfortunate trend."
In a matter of days, the university's next president, Eric Kaler, will be wrestling with this and other pressing financial issues as he takes the helm of the $3 billion, five-campus system in an era of falling state funding and growing public skepticism.
Last week, the U's board approved a budget that includes in-state, undergraduate tuition of $11,650 -- plus tens of millions of dollars in scholarships that will soften that number for many students.
Pricing a public university more like a private college presents the U with a public relations problem: convincing families to see the asterisk beside the sticker price.
Unpopular as it might be in some quarters, Bruininks said this "high-tuition, high-aid" model is the right response to falling state support.
"As tuition becomes a more important part of funding, so does financial aid need to become a more important part," he said. "If the state is going to renege on its responsibilities ... then I think it's incumbent upon us to make sure that students from low- and moderate-income families have the same opportunities as wealthier students."
A promise of free tuition
Shortly after starting as president, Bruininks had a task force study the U's financial aid. It found that the U's scholarship support ranked at the bottom of the Big Ten universities and that the money it did give was used to pull in high-performing students. That left low-income families "with some very substantial financial burdens," Bruininks said in an interview this month.
So the U transformed its financial aid, raising money for scholarships in part by matching the amounts donated. It gave more scholarships to needy students.
The Founder's Free Tuition Program started in 2005 guaranteed undergrads who were eligible for federal Pell Grants a U scholarship that would cover the difference between government grants and tuition and fees. In effect, the U's neediest students were promised free tuition.
Over the past decade, undergraduates receiving U scholarships more than doubled -- from 5,628 to 12,693. During that time, the average scholarship amount also rose -- from $2,649 to $3,143. The cost of attendance, which includes housing and books, rose from $14,726 to $22,052.
The U has done better than average at protecting its neediest students from those tuition hikes, according to an Education Trust analysis of new data from the U.S. Department of Education that measure what students pay after grants and scholarships.
Nationally, a low-income student pays an average of more than $11,000 for a year of tuition, fees and housing. That's an "extraordinary" strain, the study says. Flagship campuses were often the priciest schools in their states.
But at the University of Minnesota, Twin Cities, the net price of $6,743 for needy students falls below other flagships across the country and is lowest among four-year schools in the state. The U now sits in the center of the Big Ten.
"That's a good thing," said José Cruz, the nonprofit's vice president for higher education policy and practice. "That means that the flagship is doing what it can to keep costs low for those who need it most."
By another measure, the Twin Cities campus is the best in the Big Ten: It enrolls the largest share of poor students -- 19 percent of first-year students in 2008-09, compared with 10 percent at the University of Wisconsin-Madison.
'An unsustainable failure'?
But even university leaders admit that this focus on low-income students strains middle-class families. Last year, the U added those with incomes up to $100,000 to its need-based scholarship roster, which now numbers about 13,000 students on the five campuses.
"I am concerned about charging middle- and upper-middle-income people extra money to pay out scholarship money to lower-income students," said John Frobenius, a member of the Board of Regents. Frobenius, a retired hospital administrator, said he witnessed that kind of structure in health care. "It is tragic to see that apply to higher education."
Critics question whether U leaders have used the promise of financial aid as an excuse to allow tuition to soar. In transcripts of university meetings, some deans doubt whether the U's financial aid can keep pace, especially as state funding is cut. Others ask why the U does not take the money it uses for scholarships to tamp down tuition across the board.
This spring, those critics pointed to new evidence that the high-tuition, high-aid model can't keep up.
The U announced changes to what had been called the Founders Free Tuition Program -- now titled the University of Minnesota Promise Scholarship. Rather than being based on federal and state grants that fluctuate year to year, the program offers an incoming student the same amount for four years. The criteria changed. The maximum award shrank to $3,500 a year.
"This is just further confirmation of the fact that this administration's 'high tuition-high aid' strategy has been an unsustainable failure," wrote Bill Gleason, an associate professor and frequent critic of U leaders. "Let us hope that a new administration will lead to changes in our priorities."
But U officials point out that they're spending just as much next year on the program and that most students -- especially those in the bottom income brackets -- will benefit from the new structure.
"Reducing the overall funding has never been part of the thinking," said Peter Zetterberg, the U's senior analyst for undergraduate education. In a recent interview he said he expects that in coming years, the U will increase funding for the program, as well as the maximum scholarship amount.
Advocates watching Kaler
Falling state funding has forced this pricing here and at other public universities across the country, several U leaders said.
"Like it or not," said John Finnegan, dean of the School of Public Health, the U had to raise both tuition and scholarships to maintain its quality.
"I don't think any of us here were anxious to go down that road," he said. "But we didn't want to see higher education become only for the upper-middle-class and the privileged."
Advocates for low-income students hope that Kaler keeps focused on the neediest students, despite calls to protect the middle-income ones.
"For sure, working-class kids entering college face challenges, chief among them coming out of college with a mountain of debt," said Jim McCorkell, CEO and founder of Admission Possible, a St. Paul-based nonprofit. "But for low-income students, who are fighting every barrier to college entry, we cannot take away one of the most desperately needed resources -- financial aid."
Nou Thao might not be attending the University of Minnesota this fall without the help. Her three older sisters all go there on the U Promise Scholarship. Thao, a St. Paul native, always imagined herself there, too.
But during her senior year at Harding High School, Thao got nervous. Would the scholarships still be there?
Then the maroon-and-gold letters came. She will receive a $3,500 U Promise scholarship. Add in another university scholarship for aspiring teachers, plus federal and state grants, and she will attend the U for free -- for her first year, at least. The deal doesn't include room and board, so Thao will live at home.
Private colleges offered her scholarships, too, she said, clenching one of those letters of congratulations. "But I have always known since I was a little kid that I wanted to go to the University of Minnesota."
Jenna Ross • 612-673-7168 Twitter: @ByJenna