Higher education institutions like the University of Minnesota can expect less tuition revenue than in years past, according to a study released last month by Moody’s Investors Service. 

 

As colleges and universities focus on limiting tuition increases, revenue normally gained from those fees must come from elsewhere within the institution, University officials and leaders said. 

 

Moody’s anticipates a median net increase of around 2.2 percent in tuition revenue for public universities in fiscal year 2016, which matches inflation levels in the United States.

 

Since universities have shifted priorities to affordability, tuition freezes and state-mandated tuition caps have limited schools’ ability to generate revenue. 

 

At the University, tuition revenue is projected to increase by 1.2 percent in fiscal year 2016, said University Chief Financial Officer Richard Pfutzenreuter. 

 

After state lawmakers didn’t fully fund the University’s request to freeze tuition in its most recent budget, the Board of Regents approved tuition hikes in June. 

 

The report said state support often plays an important role in ensuring schools’ revenues don’t drop too sharply. 

 

“Tuition costs are not driven only by what the state gives us,” said Regent Richard Beeson. “But also how effective we are at cutting costs and saving money.” 

 

Tuition rose 1.5 percent and 7 percent in 2014 for in-state and out-of-state students, respectively. 

 

Beeson said the University is not anticipating any extra funding next fiscal year, so tuition rates will continue to increase to drive tuition revenue.

 

Still, Pfutzenreuter said it is rare to not receive a bump in funding during the second year of the Legislature’s biennial 

budget, especially because the state’s economy is in good shape. 

 

“The degree of state support plays a big role in our ability to keep tuition low,” he said.

 

With fewer high school students in the Midwest, Moody’s predicted that schools in the region — like the University — could see lower tuition revenues due to lower enrollment.

 

But the report said international students could play a role in making up for decreased enrollment and revenue because they often pay more for tuition. 

 

While the report said less than 7 percent of students nationwide are international, about 13 percent of University students come from abroad. 

 

“The overarching goal is to keep college affordable for students and also keep up excellence, which is a constant balance,” he said.