The University of Minnesota will raise undergraduate tuition by 2 percent for state residents and 12.5 percent for nonresidents on the Twin Cities campus this fall.

The new rates were approved Tuesday by the Board of Regents after President Eric Kaler revised his earlier proposal, which had called for a 3 percent hike for in-state students and a 10 percent increase for nonresidents.

As a result, in-state undergraduate tuition will rise to $12,800 on the Twin Cities campus, an increase of $254 per year. Tuition for nonresidents will increase by $2,776, to $24,986.

Kaler’s original plan, proposing a $376 increase in in-state tuition, got a chilly reception earlier this month from several regents. On Tuesday, he said he was offering a compromise to address their concerns. “Clearly, there was a strong spirit on the board to moderate and minimize [in-state] tuition increases,” Kaler said. “And I share that.”

Kaler said he recommended raising the nonresident rate by an extra 2.5 percent in part to help offset the smaller tuition rise for state residents. But it’s also part of the U’s long-term plan to raise the nonresident rates, which are among the lowest in the Big Ten, to about $35,000 a year, the midrange for the group.

The new rate will apply only to first-time nonresident students, while returning students will pay a 5.5 percent increase.

On the four regional campuses, the tuition hikes will be smaller: 1 percent for in-state residents at Crookston, Duluth, Morris and Rochester. Nonresidents on the Duluth campus will see a 5.5 percent increase.

The U has blamed this year’s tuition hike partly on the refusal of the Minnesota Legislature to fully fund its request for an extra $147 million over the next two years. In May, lawmakers approved a $56 million increase for the U, about a third of its request.

Kaler had urged a higher increase for in-state students, saying it was needed to meet rising costs.

But several regents said the U should do more to cut expenses rather than make Minnesota residents pay more.

On Tuesday, though, the board voted down two alternate proposals, floated by regents Michael Hsu and Steve Sviggum, that would have frozen or reduced tuition for Minnesota residents and mandated staff cutbacks.

Dean Johnson, the outgoing chairman of the board, said the regents are facing an ongoing debate about how to balance the cost of tuition and quality at the U. “The ultimate question is: What is a diploma worth?” he said. “And that’s a very difficult question to ask and to answer.”

The fall tuition rates were approved as part of the university’s $3.9 billion budget for the 2017-18 school year. The budget includes a 2 percent wage increase for most employees, with the exception of Kaler and 14 senior leaders, whose salaries will be frozen.

It’s ‘a huge deal’ for students

To several students on campus Tuesday, even modest tuition increases set off alarms. “That’s a huge deal for me,” said Harper Ciha, a senior from Backus, Minn., who joined about a dozen other students in a protest after the board vote. “It’s going to be more money out of our financial aid,” she said, adding that she already has about $37,000 in student loans. “That’s definitely a scary thought.”

Some say they’re especially wary about huge leaps in out-of-state tuition. “A vast majority of students don’t think that’s a good idea,” said Erik Hillesheim, a U business major from Eagan who is vice president of the Minnesota Student Association. He said that the U’s relatively low nonresident rate “is one of our biggest competitive advantages” and that a dramatic increase will discourage students from coming.

Michael Strawbridge, a 20-year-old visitor from St. Louis who was checking out the U’s law school on Tuesday, agreed. As an out-of-state student, he said, “I want to go somewhere where I’m getting the best education without putting myself in a huge financial hole that I’ll never crawl out of till I’m 90 years old.”

Ave Paschke, a 20-year-old interior design major from Wisconsin, said she worries about climbing tuition not only for herself, but for her younger sister, who hopes to attend the University of Minnesota. “We get help from our parents, but a lot of it is on us to pay for our education,” she said. Even though as a Wisconsin resident she pays in-state rates under a reciprocity agreement, she said any tuition hike can make it harder for struggling students. “It’s kind of like, ‘Am I going to be able to buy groceries?’ ”

At the same time, she conceded, “my education is so important to me, no matter how much [debt] I end up with, it’s going to be worth it. I know that the education I’m getting here is priceless.”

Minnesota State hikes, too

Separately, proposed tuition increases at 37 Minnesota State colleges and universities will be on the agenda when the system’s board of trustees meets Wednesday. Under a proposal released last week, students at the seven four-year Minnesota State universities face a 3.9 percent, or $272, increase this fall, bringing the new average tuition to $7,288 a year.

The plan would raise tuition at the state’s two-year colleges by 1 percent, or $48 a year, to $4,815 a year. It would be the first tuition increase at the two-year colleges in five years.