FAQs About Tuition, Record Investment in Student Financial Aid & Scholarships
Last Friday, under the leadership of our Board of Trustees, the University of Kentucky broke an important record. Increasing investments in student scholarships and financial aid by 12.5 percent in 2016-2017, our institution is now investing the greatest amount in our history—a record $117 million—to help ensure greater access and affordability.
That increased investment in scholarships and aid is part of a $3.5 billion budget that the Board approved. Their endorsement underscored our collective focus on our priorities: matching money to mission.
These funding priorities center on improving student success – with goals of 90 percent retention and 70 percent graduation rates by 2020 – and objectives included in our Strategic Plan.
As President Capilouto said at the meeting, the record investment represents an intentional and focused effort to place students at the center of everything that we do.
Throughout this budget process, we’ve maintained, as a priority, a commitment to informing and engaging the campus community about the budget development and how it strengthens our future as the University FOR Kentucky. We’ve posted a series of FAQs that we’ve received, along with answers on the UK 2016-2017 Operating and Capital Budget website.
Several of these questions are displayed below. You can find a full compilation of questions and answers here.
Why can’t you find efficiencies that save money rather than raise tuition? Since 2008, UK has responded to $67 million in recurring decreases in its state appropriations. This year alone, the University has more than $48 million in additional budget needs, a figure far greater than the state's reduction. These needs are driven by increasing fixed costs, utilities, building maintenance and operation, and increases in student financial aid, among others.
Finding efficiencies has been a part of our strategy for more than a decade. It's a process we undertake on an annual basis to meet our financial needs, but there aren't enough efficiency measures we can take without causing detrimental harm to our ability to serve students and the Commonwealth.
Tuition revenue is part of the equation, but we do not consider rate increases until all other alternatives to be more efficient or generate alternative revenue have been considered. The state dollar is the first dollar into our budget; tuition and fees are the last dollar.
How is UK trying to offset some of the cost of tuition? We begin addressing our financial needs by improving efficiencies and considering new revenues. In the FY2016-17 proposed budget, we identified nearly $7 million in additional efficiencies through e-payables, energy conservation, campus sponsorships, and operating cash returns.
In addition, the realignment in the units reporting to the Office of the Provost is generating $6 million in savings and cost containment opportunities.
Additionally, $10.8 million in new tuition revenue is generated though increased retention, a change in the residency mix in our students, a larger first-year class size, and new Masters and targeted program growth. This additional revenue is not affected by any rate increase.
All of these factors impact the cost of tuition. At the same time, our budget maintains affordable access to a quality higher education. In compliance with parameters set by the Kentucky Council on Postsecondary Education, the budget proposes a five percent increase in tuition and fee rates for in-state or resident students, and 8.5 percent for non-resident or out-of-state students.
How does UK plan to help more students with financial need? Our budget maintains affordable access to a quality higher education. In compliance with parameters set by the Kentucky Council on Postsecondary Education, the budget proposes a five percent increase in tuition and fee rates for in-state or resident students, and 8.5 percent for non-resident or out-of-state students.
The proposed rate for resident students results in a four-year average annual tuition and fee rate increase of four percent – the lowest four-year average percentage increase in more than 10 years. Since Fall 2007, the average out-of-pocket tuition and mandatory fee expense for resident students has increased by only $364 per semester because of UK’s additional investment in student financial aid and scholarships, now up to $117 million in the proposed budget – more than double the investment in the last decade.
What if we stopped all the building, we wouldn't have to raise tuition or make other cuts, right? The University’s investment in campus is primarily (91%) driven by support from sources other than the Commonwealth of Kentucky. The largest source of funds driving the campus transformation is money from our private partners, philanthropy, strategic uses of our campus resources, and support from UK Athletics.
Due to effective financial stewardship, the University has a strong credit rating, allowing us to secure low-interest bonds. Our housing partner, EdR, is funding the construction of new residence halls. Our dining partner, Aramark, is paying for the construction of new dining halls like The 90, and private donors funded the entire renovation cost of the Gatton College of Business and Economics. UK Athletics is generating its own resources for improvements in our Athletics infrastructure, and it is contributing $65 million to a new Academic Science Building.
UK was only cut 4.5 percent but you raised tuition 5 percent - why did you raise tuition more than you were cut? A state dollar and tuition dollar are not created equal. Few students pay the full cost of attendance out of pocket; most receive some type of scholarship to offset the cost of a college education. This is true at all institutions.
Because of this - what we call the "discount rate" - we do not realize the full amount of a tuition dollar. Therefore, tuition rate increases do not equate to state appropriation decreases, another reason why state investment is so critical to holding down the cost of higher education.
Kentucky has reduced UK's recurring appropriation by more than $67 million since 2008 while tuition revenue has increased by $221 million, so why can't your absorb another reduction? UK utilized the additional tuition and fee revenue to offset the $67 million in recurring decreases in its state appropriations. In addition, the University must manage fixed costs like utilities and building operations: costs that increase annually. UK also increased student financial aid and scholarships that do not have to be repaid by $56 million. As a result, nearly half of UK resident students graduate without debt.
At the same time, UK invested $110 million in the academic enterprise, campus safety, student support services, advising, and instruction.
This year alone, the University has more than $48 million in additional budget needs, a figure far greater than the state's reduction. We meet this need by examining areas where we can cut costs, improve efficiencies, and generate new revenue. Only then - the last step in the budget process - do we consider tuition and fee rates.
You can find a full compilation of questions and answers here.
Regards,
Timothy S. Tracy
@UKYProvost
#UK4KY
#seeblue