UK increases tuition 4 percent, will give 2.5 percent raises to faculty, staff

The University of Kentucky Board of Trustees approved a 4 percent tuition increase for Kentucky students Tuesday and a 6.5 jump for those from out of state.

The 2017-2018 tuition hike — which was limited by state officials earlier this year — will push in-state tuition to an average of $11,942 a year. Out-of-state students, who make up 35 percent of the student body, will see an average undergraduate rate of about $28,000 a year.

In December, the board approved a roughly 3.5 percent jump in UK housing rates, while dining plan prices will rise between 3.2 percent and 4.8 percent, depending on the plan. Mandatory fees, which are managed by student organizations, will go from $1,486 a year to $1,538.

The board held a special meeting to discuss UK’s $3.7 billion budget on Tuesday, which includes a proposed 2.5 percent merit raise for employees in the fiscal year that starts July 1. The board approved the tuition increase Tuesday, but will gather again next Friday to vote on the full budget.

Student trustee Rowan Reid was the only trustee who voted against the tuition hike.

“The escalation of the cost of higher education is being passed on only to students,” Reid said. “I think it is our duty as the University for Kentucky to make sure we are running efficiently before we pass on the costs to the students.”

UK’s budget continues to be bolstered by UK HealthCare, which has had a $100 million jump in revenue since last year.

“This budget reflects our priorities of student success and affordability, consistent movement toward competitive pay for our employees, enhancing academic quality and a commitment to being a community of belonging that makes our university stronger and more vibrant,” said President Eli Capilouto.

All state universities are dealing with the second year of a 4.5 percent cut in state funding. In addition, the state recently implemented performance-based funding, which will take 5 percent of all state funding for higher education and distribute it to schools based on how well they perform on metrics such as graduation rates and retention. UK has lost about $68 million in state funding since 2008.

UK’s budget for the upcoming fiscal year is expected to increase student aid about 8 percent to a total of $126 million. Salary increases for employees will cost $12.8 million.

UK officials are sensitive about public criticism over tuition increases, and always present a list of state flagship universities with higher in-state tuition, including Virginia, Michigan, Illinois and Tennessee. Less expensive than UK are Indiana, North Carolina, Wisconsin, Ohio and Missouri.

According to one UK study from a group of students who started in 2010, about half graduated with no debt, but those who did graduate with debt had an average debt load of $30,000. That’s about the same as the U.S. average, according to the Project on Student Debt.

The total cost of attendance next fall, which includes tuition, fees, housing, food and other living costs, will be almost $30,000 a year.

UK awards about 90 percent of its financial aid solely on merit, not financial need. This fall, though, UK will begin a program to help more students pay for school, funneling more of its money to students with financial need. The program is aimed at improving graduation and retention rates because unmet financial need is a major reason students drop out.

Under the new program, UK ended 80 merit-only scholarships, which totaled about $2.5 million. Instead, that money was offered to students in the incoming freshman class who had ACT scores of 26, high school GPAs of 3.3 and unmet financial need of $5,000 or greater. They offered 1,700 students who met that criteria awards of between $2,500 and $5,000, and as of June 2, 490 students accepted. Almost 68 percent of them came from Kentucky.

“I think the best thing we’ve done lately is the swing from merit-based to need-based (aid),” said trustee C.B. Akins. “It’s going to have the biggest impact.”

UK’s future financial outlook faces uncertainty thanks to proposed legislation in Congress. Possible changes to the federal health care law could affect UK HealthCare’s reimbursement rates for Medicaid patients, and President Donald Trump’s proposed budget would greatly cut funding to numerous UK research projects and the federal work study program, which helps low-income students attend.

Capilouto said that while these challenges are serious, he remains optimistic because Kentucky’s federal delegation has pledged support for federal research funding.

“I take that to be encouraging, but we’ll all have to wait and see,” he said.

This story was originally published June 6, 2017 at 4:31 PM with the headline "UK increases tuition 4 percent, will give 2.5 percent raises to faculty, staff."