Despite budget cuts, MSU strives to remain affordable; Simon vows to maintain 'character and quality' of university

Contact: Terry Denbow, University Relations, (517) 355-2262,

Jun 05, 2003

EAST LANSING, Mich. - The Michigan State University Board of Trustees voted today to raise tuition rates by approximately $300 per semester, increase financial aid by $9.4 million, and cut the university budget by more than $31 million.

Coupled with a recent 6 percent increase of room and board rates (a total of $298), overall costs to MSU students living on campus will be up about 8 percent for the 2003-04 school year. The board also approved an additional 2 percent tuition increase, effective the summer of 2004.

The 9.9 percent tuition increase was approved in conjunction with the university's 2003-04 budget, a spending plan totaling $694.5 million. The plan includes more than $31 million in budget cuts, as well as a $5 million increase in student financial aid.

"The entire university is to be commended for the extraordinary steps they've taken to reduce costs," said Interim President Lou Anna K. Simon. "Cutting budgets is never easy. However, we have a responsibility to our students and stakeholders to maintain the character and quality of this university."

In-state freshmen and sophomores will now pay $197.50 per credit hour (up from last year's rate of $179.75). In-state juniors and seniors will now pay $220.50 per credit hour (up from last year's $200.50).

The university has taken a number of steps to reduce its budget by about $31 million, including: " 140 fewer full-time employees over the last year, as well as an additional 100 future layoffs; administrative cutbacks and realignments that have yielded substantial savings, including the elimination of two executive-level positions, changes in campus bus service, and reorganizations of the health center and enrollment services; and the discontinuation of 15 academic programs and a moratorium on 16 others.

Despite the budget shortfalls, MSU is taking steps to remain affordable to students. In addition to a 10 percent increase in regular financial aid - a total of $3.4 million - an additional $6 million is being allocated in recognition of significant student need related to current economic circumstances. It is anticipated that this allocation will result in approximately 15,000 students receiving significant support to offset tuition and fee requirements.

MSU also is participating in the Federal Family Education Loan Program, a federally insured program that offers loans at significantly lower costs.

Under this new program, students and parents are eligible for a rebate of their loan origination fee. After 36 months of on-time payments, the interest rate will drop to 0 percent. This will amount to savings of $140 for every $1,000 borrowed by students and parents when compared to the current MSU program.

A reduction in state appropriations of at least 10 percent, coupled with increases in financial aid, salaries, fringe benefits and other areas, resulted in an initial shortfall of approximately $60 million, Simon said. About half of that will be addressed through tuition and room and board increases, the other half through expenditure reductions and reallocations.

"We have always prided ourselves on fostering and maintaining a culture of creativity and accountability," Simon said, "and that will continue despite these challenging budgetary times."

During the past eight years, MSU's policy of tuition restraint meant MSU has $45 million less than if rates had been raised the average increase of other Big Ten universities, Simon pointed out.

Between 1994 and 2001, MSU limited tuition increases to an average of 2.8 percent, a national model for success.

Simon also noted there is an $87 million gap between state-funded student support at MSU and the state's two other largest universities - the University of Michigan and Wayne State University.


MSU ranks third within Michigan institutions and fourth among Big Ten institutions for resident undergraduate tuition.

MSU students now pay approximately $1,400 less than their counterparts at other Big Ten universities thanks to the MSU Tuition Guarantee, which was enacted from 1994 to 2001. It also meant that MSU received $45 million less in revenues during that time. The Tuition Guarantee said that MSU would not raise tuition higher than the rate of inflation, as long as state appropriations matched the rate of inflation.

Since 1994, MSU tuition rates have been raised by an average of 4.6 percent. During that same time, Michigan's four-year public institutions raised their tuition rates an average of 6 percent, while Big Ten schools raised their rates by 6.6 percent.

MSU continues to be a national leader in holding the line on room-and-board costs. Since 1994, MSU has raised room-and-board rates by an average of only 3.9 percent. MSU's room-and-board rates are the lowest in the Big Ten and among Michigan public universities.

MSU is now taking part in a new federally funded program that offers loans at significantly lower costs. Students and parents who are eligible for the program could save as much as $140 for every $1,000 borrowed.

State appropriations to Michigan's colleges and universities continue to be drastically cut. In 1960, nearly 80 percent of MSU's budget came from the state. In 2003, only about half - 52 percent - of the MSU budget is from state appropriations.

Health-care costs to MSU have increased 11-fold in 22 years. In 1981, health care cost the university approximately $7 million. In 2003, that figure is estimated to be approximately $83 million.

There is a $38 million disparity in per-student funding from the state, as well as an $87 million shortfall compared to the average support provided to Wayne State University and the University of Michigan.

Since 1999, there has been no special maintenance funding from the state. It's estimated that MSU will incur $500 million in infrastructure renovations and repairs within the next 10 years.

MSU faculty salaries remain at or near the bottom of the Big Ten.

Since 1993, MSU enrollment has increased by 13 percent, or approximately 5,200 students. During that time, average ACT scores of in-coming freshmen have risen from 23.1 to 24.2. Also, the grade point average of the in-coming freshmen has gone from an average of 3.28 to 3.55.

MSU continues to make great strides in attracting external dollars. Since 1996, MSU has had a 48 percent increase in research and external grant funding (from $177 million in 1996 to $330 million in 2002).