After years with the lowest rates in the Big Ten, the University of Minnesota is considering raising tuition for nonresident students by $12,800, more than 60 percent, by the end of the decade.
The proposal, unveiled Thursday by President Eric Kaler, would raise the tuition for out-of-state students (now $20,660) by $3,200 a year, or 15 percent, in each of the next four years.
The total price for nonresidents, including tuition and fees, would ultimately rise from $22,260 this year to about $35,000 by the 2019-20 school year.
At the same time, Kaler recommended capping the increases for currently enrolled students, at 5.5 percent a year, to cushion the blow. Otherwise, he said, “that’s an awful lot to ask for people who are already here from other states.”
Kaler has been under increasing pressure from lawmakers and other critics who say the current rates favor nonresidents at the expense of students from Minnesota. At the U, in-state students pay $13,380 a year in tuition and fees, a higher rate than half the Big Ten schools.
Kaler said the proposal would move the university’s out-of-state rate from the bottom to the midrange of the Big Ten. “The idea is to get our list price, if you will, to $35,000,” he said. “That’s my guess of what the median will be in about four years.” (The higher rate does not apply to students from Wisconsin, the Dakotas or Manitoba, who pay in-state rates under reciprocity deals.)
The proposal was presented to the Board of Regents on Thursday, but no formal action is expected until next year.
State Rep. Bob Barrett, who has called for a significant increase in the rate for out-of-state students, said that Kaler’s proposal is a start. “Nonresident tuition has been and currently is way too low,” said Barrett, a Republican from Lindstrom who sits on the House higher education committee.
But he said raising that rate is just the first step. “They need to use that money to lower resident tuition,” he said. “They have an opportunity with these millions and millions of dollars they’ll receive from nonresidents, and they need to apply it to resident tuition.”
University spokesman Steve Henneberry said that “any extra funds would be used to minimize in-state tuition increases.”
U officials estimated that the plan would raise an extra $7.5 million next year. They note that, in practice, many students pay far less than the sticker price as a result of discounts and financial aid.
Cost could drop demand
But they caution that the U could lose some out-of-state students in the process. “I don’t believe you can go from $22,000 to $35,000 and not have some impact on student demand,” said Lincoln Kallsen, the U’s director of institutional analysis.
In 2008, the university slashed its out-of-state tuition by more than a third in a concerted effort to lure more students from across the country. The strategy worked, more than tripling the number of students from other states, such as California.
About two-thirds of U students come from Minnesota, and about a third from other states, according to U officials. “I think now is the time to explore the elasticity of the price,” said Kaler.
Some proponents say the current price undervalues the U when compared to other Big Ten schools, such as the University of Michigan, which charges $45,000 a year.
“I think being at the bottom, in terms of sticker price, hurts us,” said Regent Michael Hsu. “We’ve got to be concerned with our brand. … Otherwise, we’re talking about Lexus and Toyota. And we’re Toyota.”