The University announced its budget and tuition rates for the 2014 fiscal year today as part of the June meeting of the Board of Regents.

Following former President Angell’s philosophy of providing “uncommon education to the common man,” the University reduced and reallocated a variety of programs to save about $24 million in budgetary costs.

While tuition rates increased 1.1 percent and 3.2 percent for in-state and out-of-state students, respectively, students in need of aid will not experience an increase in net cost for the fifth year in a row. This was due primarily to an increase of $13.7 million in financial aid.

President Mary Sue Coleman said at the opening of the meeting that the low increase of tuition rates contributed to the high academic diversity of the University.

“Our overarching goal in developing the budget is continued excellence at the University,” Coleman said. “That includes making this remarkable academic environment available to all students by providing strong financial aid packages.”

In a press briefing before the meeting, Provost Martha Pollack said the tuition increase for in-state students is the lowest in 29 years.

The number of Pell Grant recipients at the University, a federal grant to students with low family incomes, has also increased by 74 percent over the past 10 years.

The increased allocation to financial aid is especially noteworthy due to the growing student debt burden across the nation. While 11 percent of students nationwide are defaulting on loans, the University has experienced a default rate of 1.6 percent, Pollack said.

“We have been unrelenting for more than a decade in our efforts to operate as efficiently as possible,” she said.

According to Pollack, 70 percent of in-state students currently receive financial aid compared to 50 percent of out-of-state students.

She said the University works to provide enough aid to cover cost of attendance for in-state students who qualify — including books and room and board fees — and as much of that as possible for out-of-state students.

With the proposed budget, such packages will increase to include out-of-state families earning about $40,000.

Pollack said 48.7 percent of the undergraduate student body comes from family incomes of over $150,000 but stressed that those numbers were conservative calculations from Free Application for Federal Student Aid data. Both students who do not need financial aid and students who do not apply for aid comprise these numbers.

The number of in-state students attending the University is expected to decrease from 61.4 percent to 60.9 percent of the entire undergraduate student body. Pollack attributed this changing dynamic to plummeting high school graduation rights across the state.

“The number of high-school graduates in Michigan is dropping so precipitously, and at the same time we’re seeing an explosion of applications from out of state … it’s a quality issue,” Pollack said.

She said the University is working on cost-containment through measures, such as classroom efficiency initiatives and IT rationalization efforts, providing $19.6 million for new programs.

Pollack said such efforts do result in staff downsizing in order to increase budgetary efficiency. She added that while the University received about a 2.2 percent increase in state funding, the declining history of state support of public education has made budgeting increasingly difficult.

“We have done our absolute best to respond to cuts, but every single year it becomes more and more challenging,” Pollack said. “We can’t do this forever.”

Regent Denise Ilitch (D-Bingham Farms) said she opposed the tuition increases and called for a restructuring of University finances.

“The business model is not sustainable,” Ilitch said. “I’m going to continue to encourage us to change, it’s not just a University problem, it’s a national problem.”

Ilitch added that the University should focus more on bringing money in than charging students more.

“If we were as good at raising revenue streams as we are in raising tuition, our students would be far better off,” she said.

The increase was approved six to two votes, with Ilitch and Regent Newman (R-Ann Arbor) dissenting.

E. Royster Harper, vice president for student affairs, requested a 2.5 percent increase in room and board charges. This increase is intended to help cover the costs of residence hall renovations, such as the current construction on South Quadrangle Residence Hall and future plans for West Quadrangle Residence Hall.

The request was approved by the regents.

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