Office of the Vice President for Global Communications

Friday, June 22, 2012

Aid will cover total increase in costs for students with financial need

The Board of Regents on Thursday approved a budget that will increase financial aid enough to cover the full rise in the cost of attendance for the typical Michigan resident student with financial need — and reduce the student's loan burden. The budget was approved on a vote of 5-3.


View an interactive graphic about the budget and tuition.

This is the fourth consecutive year an increase in financial aid more than offsets the increase in tuition and room-and-board rates for most state resident students with financial need. Additionally, that increase will come in the form of grant aid — which does not need to be repaid — reducing the educational loan portion of those students’ financial aid package.

"For four straight years now we have presented a financial aid budget that covers the full increase in tuition for our neediest students,” said President Mary Sue Coleman. “This year’s increase in financial aid will come in the form of grants, not loans, which helps reduce student debt burden.
"More aid.  Less debt.  We’re continuing to move in the right direction."

Coleman praised Provost Phil Hanlon and his budget team for their work on the budget. “It is an impressive undertaking that continues to maintain our highest standards while working within very tight economic restraints.”

The spending plan includes a $360 (2.8 percent) increase in lower-division resident tuition. Tuition for 2012-13 will be $12,994. The increase for non-resident students is $1,340 (3.5 percent) or $39,122 for the year.

The budget calls for need-based financial aid for undergraduates to increase by 10.1 percent ($9.2 million), marking the seventh year in the last eight that aid for undergraduates will increase by at least 10 percent.

Regent Julia Donovan Darlow, who voted to approve the budget, said she was very pleased with the spending plan because there will be no increase in what students with financial need actually pay out of pocket. Also voting in favor of the budget were Regents Kathy White, Olivia Maynard, S. Martin Taylor and Andrew Richner.

Regent Denise Ilitch was among those who voted against the budget. She said another increase in tuition was making higher education into a luxury only a few can afford. Joining her in voting no were Regents Laurence Deitch and Andrea Fischer Newman.

The budgets from UM-Flint and UM-Dearborn also were approved on 5-3 votes.

The Ann Arbor campus budget is based on a state appropriation of $273.1 million, which is a 1.6 percent increase. This follows a 15 percent cut in state funding last year.

“While we certainly appreciate this increase, it also is important to note that this modest increase comes after a decade of significant cuts in state funding,” said Hanlon, the university’s chief academic and chief budget officer. On a per-student basis the state appropriation has been cut by 50 percent in the past decade, after adjusting for inflation.

Despite those reductions, the spending plan for the year ahead underscores the university’s academic excellence. The budget maintains the university’s commitment to hiring additional faculty members to help lower the student-faculty ratio over time, an effort begun several years ago. The budget also offers support for innovative new academic initiatives that help students keep pace with the ever-evolving needs of society.

Part of what makes the commitment to academic programs and financial aid possible is the university’s decade-long commitment to cost containment and reallocating resources to the highest priorities, explained Martha Pollack, vice provost for academic and budgetary affairs.

“Each year we ask units across campus to reduce their spending by 1-2 percent to help fund new initiatives,” Pollack said. “That’s in addition to extensive campuswide cost-saving efforts ranging from benefits restructuring to strategic purchasing.”

Since 2004, the university has trimmed or reallocated $235 million in recurring expenses in the general fund budget. The FY 2013 budget contains more than $30 million in reductions or reallocations, which is the first step in an ongoing commitment to identify an additional $120 million in savings by 2017.

Just last week, the U.S. Department of Education released updated information that shows U-M has improved its affordability ranking from last year — dropping lower on the list — in each of four categories featured in the annual College Affordability and Transparency Lists. 

Especially notable was the university's ability to keep increases in tuition and fees and net price moderate: U-M ranked 520th in the percent increase in tuition and fees, and 568th in the percent increase in net price out of a total of 650 four-year, public institutions. The other categories of rankings are tuition and fees and net price.

Housing rates

Separately, regents approved a 3 percent increase in residence hall room-and-board rates. The plan includes a 1 percent increase to partially offset projected cost increases and a 2 percent increase to continue funding for major renovations of housing facilities.

The basic cost per student for a double room with a standard meal plan will total $9,752 for the 2012-13 fall and winter terms, an increase of $284. Rental rates in Northwood Community Apartments for upper-level undergraduates, graduates and students with families will increase by an average of 1 percent.

The rate increases reflect adjustments for projected expenses, after planned reductions in operating costs. Offsetting a forecast increase of $2.2 million in employee costs, raw food supplies and energy costs, University Housing is reducing operating expenses by $1.7 million for FY 2013.

University Housing is a self-funded auxiliary unit of the university. Since fiscal year 2006, University Housing has achieved $11.3 million in cost reductions that have helped minimize increases in room and board rates over the years.