Editor’s note: The Penn State Board of Trustees voted to approve the 2022-23 tuition and fees schedules and a general salary increase for most employees, as outlined below, during its meeting July 22 at Penn State York.
YORK, Pa. — Pennsylvania resident undergraduates would see tuition increase by 5% at the University Park campus and 2% at the Commonwealth Campuses for the 2022-23 academic year under a plan recommended today (July 21) by the Penn State Board of Trustees Committee on Finance, Business and Capital Planning. However, as part of Penn State’s commitment to access and affordability, Pennsylvania resident and out-of-state undergraduate students with household incomes of $75,000 or less and who have filed a Free Application for Federal Student Aid (FAFSA) would not see a tuition increase due to the investment of additional funds for student aid. According to the U.S. Census Bureau, the median annual household income in Pennsylvania is $63,627.
The proposed tuition and fees schedules, which will be voted on by the full board Friday afternoon (July 22) at Penn State York, also include a 6% tuition increase for nonresident undergraduates at University Park; a 3% increase for nonresident undergraduates at the Commonwealth Campuses; and a 5% increase for Penn State World Campus undergraduates (unless household income under $75,000). In addition, tuition would increase by 6% for all graduate and professional students, regardless of campus or residency status.
“Our commitment to our students is our highest priority,” said Penn State President Neeli Bendapudi. “We understand the impact of a tuition increase on our students and families, and we do not take the decision to raise tuition lightly. Unfortunately, the circumstances of our current budget made these increases necessary in order to maintain the highest-quality educational experiences for our students. However, consistent with Penn State’s land-grant mission, we have worked to alleviate the effects as much as possible by providing additional aid to support students from lower- and middle-income families.”
The committee also recommended, and the full board will vote on, a proposed 2.5% general salary increase for most Penn State employees to help offset the impacts of inflation on the University’s workforce and maintain top talent.
The University is budgeting an additional $14 million for financial aid to offset the tuition increase for degree-seeking undergraduate students with household incomes of $75,000 or less per year. Students who have not yet filled out a 2022-23 FAFSA are strongly encouraged to do so immediately, so that they can be considered for this aid. While all students would be assessed the higher tuition rate and see it on their semester bill, students receiving tuition assistance also would see an “Access Grant” award listed on their monthly billing statement as well as on their 2022-23 financial aid award summary in LionPATH. This additional aid would offset the tuition increase shown on the student’s bill. Per normal practice, undergraduate students moving from lower division to upper division or changing campuses or academic programs would see a tuition increase based on these parameters, but the increase would reflect 2021-22 rates.
The $14 million in new Access Grants for the 2022-23 year is part of a total $36 million financial aid allocation, which also supports existing financial aid for students in need.
A number of factors contributed to the proposed tuition increase, including nearly unprecedented inflationary cost increases this year; stagnant funding from the commonwealth for the third year in a row; prior tuition freezes in three of the past four years; and increased costs, lower revenues and lower enrollments partially due to the pandemic. Additionally, the University has been operating at sub-inflation for both tuition and state appropriations for more than a decade. As Penn State’s enrollment has increased through the years, the University’s state funding has not grown with it. Historically, Penn State receives the lowest per-student funding (approximately $5,400/Pennsylvania resident student) of any public higher education institution in the commonwealth. The absence of regular increases in Penn State’s state appropriation has only intensified the pressures on Penn State’s tuition rates.
Operating budget approval this fall
The University will present a 2022-23 operating budget for the board’s approval in September in order to allow time to revise unit budgets that have been impacted by inflation, flat state funding, and ongoing pandemic-related enrollment and revenue pressures. Penn State leadership will be working with budget executives and financial officers on a 3% rescission for 2022-23 before presenting a proposed final fiscal plan to the board — with the goal of reducing the University’s operating deficit, which stood at $166 million in 2021-22 and is currently projected to be approximately $191 million.
The 3% rescission, which is expected to generate cost savings of approximately $46.2 million, follows several years of budget rescissions and cost-cutting measures to reduce the University’s overall expenses. Even with these cuts, Penn State is projecting a number of cost increases outside of its control for the coming fiscal year, including increases of $16.1 million for employee benefits and $6.2 million for insurance.
While Penn State’s overall balance sheet remains stable, the use of central reserves to balance the operating budget, as the University has done out of necessity during the pandemic to cover unreimbursed COVID-19 expenses, is not sustainable, according to Sara Thorndike, Penn State senior vice president for Finance and Business/treasurer. Thorndike said the University will be working throughout the summer and fall to examine its current budget structure, with a focus on new revenue opportunities, strategic expense reductions, and the creation of a new multiyear budget allocation model.
Bendapudi said that while University leadership will use the next few months to look deeper at spending and identify opportunities to reduce expenses, setting tuition and fees could not wait with the beginning of the fall semester a month away. However, she noted that increased tuition alone would not fully resolve the University’s budget challenges, and additional cost-cutting measures and efficiencies will be required.
“The challenging budget environment we are facing will require careful examination of how we allocate our resources,” said Bendapudi. “While work to address these challenges will be ongoing, our goal throughout this process will be to minimize the impacts on our students and their families while continuing to prioritize our employees, as they are essential to Penn State’s success and to the success of our students.”
Until a final budget is approved by the board in September, the University will continue to operate under the interim operating budget that was approved in May, with the addition of the 2022-23 tuition schedules and the proposed 2.5% general salary increase.
2022-23 tuition and fees
Proposed undergraduate tuition increases and rates per semester for the 2022-23 academic year, by campus, are as follows: