University of Minnesota worries about drop in out-of-state numbers after nonresident tuition increases

Fewer freshmen from outside the state are studying on the University of Minnesota's Twin Cities campus this fall after two years of double-digit nonresident tuition hikes.

The number of new students from states that do not have reciprocity agreements with Minnesota dropped by a quarter as their tuition rate jumped 15 percent, to $28,730 a year. Now, President Eric Kaler is proposing a 10 percent out-of-state tuition increase next fall. That's scaling back an earlier plan to go up another 15 percent, which officials now deem too risky.

"We are getting really close to the point where we can do more harm than good," said Vice Provost and Dean Robert McMaster.

The U cut its nonresident rate sharply roughly a decade ago in a successful effort to boost its out-of-state enrollment and its national standing. Its recent drive to raise it again — and land closer to the middle of the Big Ten — is complicated by increasingly intense national competition for nonresident students and looming declines in the number of high school graduates.

At the same time, the U has been under some pressure from lawmakers and others to raise nonresident rates and make college more affordable for Minnesota students. Despite the enrollment decline and extra spending on financial aid for nonresidents, raising out-of-state tuition has increased net revenue.

At a Thursday meeting, most members of the U's governing board signaled they would support the latest 10 percent nonresident tuition increase, even as they said they were unnerved by the enrollment numbers. Regents will vote on the proposal in December.

Kaler has not yet unveiled a target tuition number for Minnesota students, who are paying about $13,000 this fall, or 2 percent more than last year.

The strategy of slashing nonresident tuition and stepping up outreach has paid off in a tripling of the university's out-of-state enrollment since the early 2000s. Thanks to reciprocity agreements, students from Wisconsin and the Dakotas pay the in-state rate and are not included in these counts.

But that strategy also drew charges from some state leaders that Minnesota students and taxpayers have come to subsidize out-of-state arrivals on campus. U officials have also suggested that for some families, the relatively low nonresident tuition signaled an inferior product.

Since 2016, the U has increased that tuition at a fast clip, though it still ranks 12th out of 14 institutions in the Big Ten. Meanwhile, the university hired recruiters in New York and Texas this year to expand on longer-standing outreach efforts in Illinois and California. It also poured extra money into financial aid after a sharp drop in nonresident applications last fall.

Last year, the number of nonresidents in a Twin Cities freshman class of roughly 6,000 students peaked at 980, but the number has dipped to 726 this fall.

There's more to the drop than tuition cost, officials argued. As colleges and universities nationally draw a shrinking number of international students, rivalry over out-of-state students has intensified. Amid more restrictive immigration policies under the Trump administration and a stronger dollar that makes college elsewhere more affordable, the U also saw international student enrollment drop by a quarter, to about 290 students.

"We're swimming upstream against the fact that we are the Great White North," McMaster said. "We're flyover country."

Still, U officials said they plan to stay the course, cautiously. The proposed 10 percent nonresident tuition increase next fall is expected to make the U the eighth or ninth most expensive in the Big Ten and bring in a $7 million net increase in revenue. Officials aim to enroll 825 students from outside Minnesota and states with reciprocity agreements, as well as roughly 300 international students.

Factoring in increased financial aid and recruitment costs, the U saw a $6.6 million uptick in net nonresident tuition revenue this fall — short of the $10 million Kaler projected last year.

Some regents said they would back another increase reluctantly. The board's vice chairman, Kendall Powell, said the prospect makes him "a bit queasy."

"There are a lot of warning lights out there, and I think we should take a very careful swing at this," said Regent Peggy Lucas.

A couple of regents urged Kaler to go full speed ahead with those tuition increases. Darrin Rosha said that the roughly two-thirds of students the U enrolls from Minnesota is too low, and the university should go after high school grads from rural areas of the state more aggressively: "I don't think we should be investing so much in trying to replace Minnesota students."

On campus, student leaders have voiced concern over the nonresident tuition increases. Isaiah Ogren, a junior from Dallas, said the university was on his radar only because his father grew up in Minnesota — and the price tag was a big selling point. To Ogren, who designed his own law and inequality major, the U still has a way to go to cement its national profile.

"These tuition increases before we've laid the foundation for national recognition are putting the proverbial cart before the horse," he said.

Ogren, who as a returning student this fall saw a 5.5 percent tuition increase, said for many students like him, the hikes mean passing up unpaid internships and working more hours during the school year.

Across the country, universities have zeroed in on nonresident students as they grapple with budget pressures. A slew of them have raised rates, more recently at the University of Wisconsin and the University of California systems this year. Striking a balance between price and a healthy enrollment is the "Gordian knot" of college admissions, said David Hawkins of the National Association for College Admission Counseling.

In any case, there's no doubt the competition for these students is getting more heated amid demographic changes.

"There are now fewer 18-year-olds than there were 10 years ago," said Nate Johnson of Postsecondary Analy­tics, a Florida-based consulting company, "and just as many colleges competing for them."

Mila Koumpilova • 612-673-4781