Editor’s note: The Penn State Board of Trustees voted to approve the University's 2025-26 operating budget and tuition and fees schedules, as outlined below, during its meeting on July 19.
ALTOONA, Pa. — A balanced Education and General budget and tuition freeze for Pennsylvania resident undergraduates at the Commonwealth Campuses highlight Penn State’s proposed 2025-26 fiscal plan, advanced today (July 18) by the Penn State Board of Trustees Committee on Finance, Business and Capital Planning.
The full board will vote on the fiscal year 2025-26 operating budget and tuition and fees schedules during its meeting Friday afternoon (July 19) at Penn State Altoona.
Among the notable elements of the FY 25-26 plan:
-
The balanced Education and General (E&G) budget fulfills the shared goal of the Board of Trustees and President Neeli Bendapudi, developed shortly after Bendapudi’s 2022 arrival at Penn State, to resolve the University’s budget deficit by the summer of 2025.
-
In line with Penn State’s public access mission, tuition for Pennsylvania resident undergraduates at the Commonwealth Campuses would be held flat for a third consecutive year, benefiting approximately 18,000 students, or 43% of the University’s in-state undergraduate population.
-
In-state undergraduates at Penn State’s University Park campus would see tuition increase by 2% in 2025-26, while nonresident undergraduate tuition would increase by 1% at the Commonwealth Campuses and 4% at University Park.
-
Continuing the commitment to access, the University has increased central funding used for student financial aid by $5 million, bringing Penn State’s total investment in financial aid to more than $455 million for 2025-26.
-
Recognizing the importance of graduate education to the University’s academic enterprise and the need to remain competitive for top students, graduate assistant stipends would increase in value by 4%, starting with fall 2025 appointments.
-
As part of Penn State’s continued investment in employees, the budget includes a 3% pool ($83 million University-wide, including $48 million in the E&G budget) for employee annual salary increases. The University also has budgeted $5.4 million to centrally fund both tenure-line and non-tenure-line faculty promotions, and $24 million has been budgeted to cover projected cost increases for employee benefits.
“Our focus is on preparing Penn State for the future and making a great university even greater,” said Penn State President Neeli Bendapudi. “A critical part of that is a balanced budget, as it will provide us with the financial strength to evolve as an institution and invest in areas critical to our mission, including our research enterprise and our academic programs, so that we remain at the forefront of innovation. Reaching this point has taken hard work from so many dedicated Penn Staters. I know it has not been easy, and there will need to be continued commitment to address these challenges. However, the efforts we have undertaken to strategically reduce expenses, transform how we allocate our resources, improve efficiencies, and grow our revenues — while still delivering a world-class educational experience for our students — have placed us on a sustainable financial path and set us on a course for a bright future.”
Previously, the 2024-25 tuition schedules and operating budget were approved by the board last July as part of the University’s transition to a two-year budget model.
Reaching a balanced E&G budget
For fiscal year 2025-26, the committee advanced a proposed University-wide budget of approximately $9.9 billion, which includes the tuition-and-state-appropriations-funded E&G budget of $2.9 billion. The University-wide budget also encompasses all other operations and subsidiaries, including Penn State Health, Intercollegiate Athletics, Auxiliary and Business Services (including Housing and Food Services), Agricultural Research and Extension, Pennsylvania College of Technology, and capital projects.
To achieve a balanced E&G budget, Penn State has had to reduce or reallocate $89 million in expenses for fiscal year 2025-26, with budget reductions of $11 million for academic colleges, $29 million for administrative and student-support units, and $49 million for the Commonwealth Campuses. These reductions do not reflect $26 million in carryforward funds that will be allocated to individual colleges, campuses and units for 2025-26 next year.
As work continues to transform Commonwealth Campus operations in the face of declining enrollments and changing demographics, Penn State has invested approximately $50 million in the 2025-26 budget to support the Commonwealth Campuses. This includes $31 million in provost-provided subvention (operating subsidies) to mitigate a larger budget reduction and a one-time investment of up to $20 million of the president’s $50 million strategic funds allocation for 2025-26 to help balance campus budgets.
Penn State also recently conducted a Voluntary Separation Incentive Program (VSIP) to help reduce the Commonwealth Campus deficit by incentivizing campus employees to depart the University. The VSIP resulted in salary and benefits savings of $43 million, although actual savings will not be known until later in 2024 once University leaders assess which positions will need to be backfilled. As a result, the exact amount of the president’s one-time investment will be determined after the final savings realized from the VSIP are compared against the overall $49 million Commonwealth Campus deficit.
In total, the 2025-26 budget allocates $51 million to the provost for strategic subvention for academic units. Of this amount, $11 million will be used for permanent subvention for the College of Arts and Architecture and the Nese College of Nursing, and $9 million will be used for one-time subvention for the other academic colleges, in addition to the $31 million for campus subvention.
“Our new budget model is allowing us to be more strategic and data-driven with how we allocate our resources, but it is flexible enough that we are still able to invest in the things that make Penn State one of the world’s top public universities,” said Sara Thorndike, senior vice president for Finance and Business/treasurer. “I want to thank everyone across our units for working so hard to find innovative ways to save money and be more efficient while minimizing the impact on our students and employees. The fact that we achieved our goal of a balanced E&G budget within three years shows the power of our community, and Penn State is in a stronger financial position today because of this critical work.”
2023-24 deficit shrinks
After initially projecting a $44.5 million deficit in the 2023-24 E&G budget, Thorndike said the current projected deficit now stands at less than $7 million. The $38 million improvement is due primarily to cost savings related to services and natural employee attrition, Thorndike said.
Penn State is still working to close the 2023-24 books and will report final budget results to the board later this fall. As anticipated, any remaining deficit for 2023-24, as well as the projected $34.1 million budget deficit for 2024-25 that was approved by the board last summer, will be offset by University reserves.
2025-26 tuition and fees
The proposed tuition schedules for the 2025-26 academic year include the following rate increases:
Commonwealth Campuses
-
No increase for in-state undergraduates.
-
1% for out-of-state undergraduates.
-
1% for in-state graduate students.
-
2% for out-of-state graduate students.
University Park
-
2% for in-state undergraduate and graduate students.
-
4% for out-of-state undergraduate and graduate students.
World Campus
-
1% for all Penn State World Campus students (undergraduate and graduate, regardless of residency).
Law schools
-
5.5% for Penn State Law students.
-
2% for Dickinson Law students.
College of Medicine
-
2% for in-state medical students.
-
4% for out-of-state medical students.
“We know that these decisions have real impacts on the personal finances of our students and their families,” Bendapudi said. “That is why we have held tuition flat for 18,000 in-state students at the Commonwealth Campuses for the third year in a row and implemented modest tuition increases for all other students at the remainder of our campuses that are line with the percentage increases seen in recent years.”