University of Minnesota leaders say tuition increase strategy for nonresidents is working

After a string of double-digit tuition increases for out-of-state students, the University of Minnesota has met a goal of moving from the bottom to the middle of the Big Ten pack for nonresident costs — a move meant to curb cost increases for Minnesota students.

Now, amid dips in nonresident enrollment, the university plans to hold off on further major price hikes, officials told the U's governing board Thursday. The U is bringing in considerably more from out-of-state student tuition, despite the enrollment decline and new investments in financial aid and national recruiters. Student leaders have argued that the nonresident tuition hikes have already gone too far and are turning off talented students from other parts of the country. But during a Thursday discussion, regents said the U's strategy has worked well.

"If we have been generous in the past, it has been at the expense of Minnesota students and Minnesota taxpayers and families," Regent Steve Sviggum said.

U administrators, who estimate resident tuition would have been 10% higher without those hikes, have cautioned that these are risky times for Midwest campuses: They are facing shrinking high school graduating classes and much more intense competition for national students. In fact, U officials noted that in response to that market uncertainty, a slew of Big Ten schools froze and only slightly increased nonresident tuition this fall, which pushed the U's rates up to the eighth highest in that group.

This year, Minnesotans face a sticker price of $15,236 in tuition and fees on the Twin Cities campus; that price is $33,534 for nonresidents.

The university deeply discounted nonresident tuition in 2007 in a bid to significantly boost the influx of students from outside Minnesota and neighboring states that have reciprocity agreements with the U and pay resident rates. That move worked in drawing students from other parts of the country. But over the years, lawmakers and others increasingly complained about that approach, which they said shortchanged Minnesotans.

The university started raising nonresident tuition in the early 2010s, with double-digit increases in each of the past three academic years, including a 15% hike in 2018-19. Out-of-state freshman enrollment from non-reciprocity states on the Twin Cities campus, which had climbed from about 350 students in 2007 to a high of 980 two years ago, dropped to 726 in fall 2018. It rebounded slightly this fall to 770. In a development that surprised officials amid national news of flagging international student enrollments, the U also welcomed a record number of foreign students, at 470.

Despite smaller incoming out-of-state classes, revenue from nonresident tuition has climbed, from $53 million five years ago to an estimated $71 million this year. That's even though the university is chipping in more to draw national students, placing new recruiters in Texas and New York and adding a second recruiter in California.

Vice Provost Robert McMaster noted that those recruiters have cited the growing price tag among a list of challenges, such as families thinking that in Minnesota "it is winter all the time and in the middle of nowhere," in the words of the recruiter in the New York and New Jersey area. McMaster also highlighted feedback from current students who have described tuition costs as a growing burden, though increases are restricted to 5.5% for them.

"What's alarming to me in the field of enrollment management is that some of these students might in fact bolt from the university," he said.

Regent Richard Beeson reminded McMaster that he had been "skittish" when the university set out on a path of aggressive out-of-state tuition hikes.

"Would you characterize this as a financial success?" Beeson pressed McMaster.

"I certainly wouldn't call it a failure," McMaster said. "Yes, I would call it a success."

Administrators said they are not ready to present the board with a nonresident tuition proposal for next fall. But, said Brian Burnett, the senior vice president for finance and operations, the days of double-digit hikes are likely over.

Some at the board table did not embrace the self-congratulatory tone. Mike Kenyanya, one of four regents who joined the board last spring, said that he has a better understanding now of the university's strategy behind raising nonresident tuition. Still, he said, cheering on the U's rise to the middle of the Big Ten for those costs is "tone-deaf" and "infuriating" to families, he said.

Anthony Kahane, a student representative to the board, said the affordable price tag had been a major selling point when he came to the U from Illinois, and he worries the university is losing that edge.

"I certainly would never have considered the university if a 15% tuition increase was even peripherally on the horizon," he said.

Regent Michael Hsu, a longtime proponent of arresting tuition increases for Minnesotans, suggested he wants to see local students reap more tangible benefits from the U's tuition strategy.

"I still think we should be helping the in-state students more by freezing or lowering tuition by a percent or two," he said. "I think it's certainly possible."