The University’s Board of Regents voted 5-3 on Thursday to increase tuition rates by 2.8 percent for in-state students and 3.5 percent for out-of-state students for the 2012-2013 academic year.

The rates will amount to a hike of $360 for in-state students and $1,340 for out-of-state students and will be paired with a 10.1-percent increase in available financial aid for need-based undergraduate students, totaling $144.8 million.

During the meeting, University President Mary Sue Coleman said the increase in financial aid will help offset the tuition hike for students in need.

“For four straight years now, we have presented a financial aid budget that covers the full increase in tuition for our neediest students,” Coleman said. “This year’s increase in financial aid will come in the form of grants, not loans, which helps reduce (the) student debt burden.”

In a press meeting before the regents meeting, University Provost Philip Hanlon called financial aid “the highest priority in this budget” and expressed the University’s efforts to help students in need and maintain the University experience. This is the seventh of the past eight years that financial aid for undergraduates will increase by at least 10 percent.

The approved fiscal year 2013 tuition increase is less than that of fiscal year 2012, in which out-of-state students experienced a 6.7-percent increase, and in-state students accrued a 4.9-percent increase, amounting to $1,781 and $797 respectively.

Tuition rates will also increase by 3.6 percent at the University’s Flint campus and 3.7 percent at the University’s Dearborn campus. Additionally, room and board rates at the Ann Arbor campus will increase by 3 percent, totaling $284 for fiscal year 2013. Two percent of the increase will be allocated for ongoing residence hall renovations.

The state appropriation will be about $273.1 million, increasing 1.6 percent from last year, and is part of Republican Gov. Rick Snyder’s projected budget that calls for a 3.1-percent increase in higher education funding. This follows the fiscal year 2012 budget, in which the state’s 15 public universities saw a 15-percent decrease in funding.

During the press conference, Hanlon said while the University appreciates its relationship with the state, the administration will continue to urge the government to expand its efforts to aid state universities that have suffered repeated cuts over the course of the last decade.

“We value our long partnership with the state, and we appreciate very much that the state is increasing its investment in higher education,” Hanlon said. “In real terms, the state appropriations for the Ann Arbor campus has dropped $178 million over the past 11 years, and so we urge the state to continue to make higher education a priority.”

Regents Denise Ilitch (D–Bingham Farms), Laurence Dietch (D–Bingham Farms) and Andrea Fischer Newman (R–Ann Arbor) voted against the tuition increases, expressing frustration with the growing rates and providing suggestions for other methods of cutting costs.

“I think we need a new model, and I think there are ways to do it,” Newman said in an interview after the meeting. “I think there are ways to raise revenue.”

During the meeting, Ilitch called the trend of increasing tuition at the University and around the nation “unacceptable,” noting that upwards of 60 percent of the state’s college graduates carry substantial debt.

“There’s one thing that remains consistent, and that is that tuition continues to skyrocket and the burden on our students continues to increase,” Ilitch said.

Regent Julia Darlow (D–Ann Arbor) echoed Ilitch’s sentiment about the strains of rising tuition costs for families, though she added she was “very pleased and very impressed” with the administration’s effort to assist students through increased financial aid.

Darlow said vast improvements have been made to aid students from middle- and low-income homes, and the average middle-income student now pays less than they did in 2004.

In setting the University’s budget, Hanlon noted three primary goals: maintaining and expanding the University’s academic strength and excellence, operating efficiently and ensuring college affordability and accessibility.

As part of the budget, faculty will receive a 3-percent salary increase, and staff will receive a 2-percent salary increase as part of the budget, which Hanlon said is essential to securing the strength of the University.

“Academic excellence begins with human resources. Universities are excellent because of their people,” Hanlon said. “To maintain academic excellence, we need the most outstanding students, faculty and staff at this university.”

According to Hanlon, portions of the general funds will also be allocated to maintaining the University’s library system, developing educational program and investing in new technology. Funds will also be used to better consolidate IT programs on campus that he said have historically been “disaggregated” with too many units.

To decrease budget cuts and tuition increases, the University has continued to engage in a long-term commitment to cost containment policies, spearheaded by Coleman in 2004. Since the onset of the program, the University has reduced $235 million in general fund expenditures and seeks to save another $120 million in the next five years — $30 million specifically in the coming fiscal year.

Cost containment efforts include reducing low-enrollment classes, better consolidation of services and staff, altering health care and benefit programs and increasing energy efficiency in campus buildings.

The cost reduction program has allowed for reallocation of funds to other efforts like revitalizing academic buildings. Hanlon said the University will soon embark on a three-year program that will grant $45 million each year for large-scale campus renovations, which are “more cost-effective than doing piecemeal fix ups.”

The administration seeks to ensure that the quality of life on campus is not hindered or negatively impacted for students when determining the budget and cutting costs, according to Hanlon.

“We do not want to in anyway reduce the experience our students have, so we’re very careful when we do these things to try to make sure we do them in a way that will enable an excellent education for our students,” he said.

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