Students can expect to pay about $1000 more this year for tuition in light of the University Board of Regents’ approval of a 12.3-percent hike for in-state undergraduates and a 6.9-percent raise for out-of-state students last Thursday.

This year’s increase is based on the $5.9 million funding reduction that the University would face if Gov. Jennifer Granholm’s proposed budget is approved. The hike is about four times larger than last year’s tuition increase of 2.8 percent and comes after $43 million worth of state funding cuts from the University since 2002.

“This is unprecedented in the history of the University,” University Provost Paul Courant said about the three consecutive years of state appropriation cuts.

The last time the state cut University funding was in 1982, but funding was increased the following year. Cuts aside, there has been a long-term trend that has shifted the responsibility of financing the University away from the state and increasingly onto the University, as well as students and parents who pay tuition.

In 1982, with the share of state funding already declining, Michigan funded 51 percent of the University’s operating budget. Last year it was about 27 percent.

The University has responded to state funding cuts with modest tuition increases over the past several years, but these increases were not enough this year.

A larger tuition increase is needed for the upcoming academic year, Courant said. He also warned mid-year cuts may occur, citing four consecutive years of such cuts from the state.

University President Mary Sue Coleman cited Michigan’s tepid economic growth as the “heart of this year’s pressure on tuition.”

The University will be cutting $20.1 million from its 2006 budget by releasing staff, recalculating employee benefit packages and canceling some courses, while offering others less frequently. This cut comes in addition to the $57.3 million the University has cut from its internal budget since 2004.

At the same time, the University will allocate another $11 million to academic pursuits, such as a center to work on faculty and student programs in Detroit, new teacher preparation programs in the School of Education and an internship program in Washington, D.C.

The University will also direct money to academic units to ensure that there are enough sections for LSA and Engineering and students have enough class offerings to graduate in four years, Courant said.

Courant defended more money for academic programs, saying the University must change what it offers to students to keep up with their demands and to remain an educational leader.

“Our mission is to be on the cutting edge,” Courant said. He said, twice as much should be ideally invested in new academic programs, but budget problems have held that figure to $11 million for next year.

To help students as tuition rises, the University will also increase financial aid from its General Fund by 14.5 percent for in-state undergraduates and 6.3 percent for out-of-state undergraduates. The General Fund contains money from state appropriations, tuition and fees and a small amount from research grants that help cover operating costs.

In-state students will also be eligible for aid from the University’s new M-PACT program, which will allow them to replace loans in their financial aid packages with need-based grants.

The addition of these grants and the increase in General Fund grants amounts to a 28.6-percent financial aid increase for in-state undergraduates.

The University’s average annual increase in the past five years has been second lowest in the Big Ten, with only Northwestern University having a lower increase over the period.

The Regents also approved an 11.9-percent tuition increase for the University’s Dearborn and Flint campuses.

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