Penn State plans to enact lower tuition scenario

July 16, 2009

University Park, Pa. -- Penn State has decided to move forward with the lower of two possible tuition scenarios for the fall semester based on strong support being received this week in Washington and from legislators in Harrisburg.

The U.S. Department of Education has ruled that Pennsylvania must include state-related institutions in the application for federal stimulus funds. Consequently, Penn State plans to send out Fall Semester tuition bills with the lowest tuition increase in the school's recent history. The figures range from 3.7 to 4.5 percent depending on campus location and residency status.

"Based on the support we received from members of the Pennsylvania Congressional delegation, the U.S. Department of Education, and feedback from many of the leaders in the Pennsylvania Senate and House of Representatives, we have decided to recommend the more modest of our tuition increase scenarios," said Penn State President Graham Spanier. "We are very concerned about the rising cost of higher education for our students, and a stable appropriation from the Commonwealth will allow us to keep our tuition increase modest."

Penn State's Board of Trustees executive committee will be convened Friday, July 17, to ratify this decision.

Penn State learned late Tuesday that the U.S. Department of Education had returned Pennsylvania's application for stimulus funding. In its letter, the Department of Education indicated that the exclusion of the state-related universities, including Penn State, was not appropriate and that stimulus funding must be made available to them as public universities to help curb high tuition increases.

In their support of Penn State, 15 members of Congress wrote to the Secretary of Education opposing the state's application. The group letter that was sent stated, "The Commonwealth's application is at odds with the letter and spirit of the American Recovery and Reinvestment Act, which clearly notes that states are to provide funds to public institutions of higher education."

"We are pleased with this timely and positive response to the June 26 announcement by the governor that declared state-related universities to no longer be considered public institutions eligible for stimulus funding," Spanier said.

"We are also deeply grateful to the members of Congress from Pennsylvania who signed a letter supporting our position to the U.S. Secretary of Education," he said.

The positive news is tempered by the continuing uncertainty around the ultimate passage of a budget for the Commonwealth. "The Commonwealth is facing unprecedented fiscal challenges, and we recognize that rescinding the proposal to cut our budget by $61 million places additional pressure on the Legislature and governor. But it is the right thing to do," said Spanier.

"In spite of the risk of setting tuition rates without an appropriation, we are moving forward with the lower tuition option," Spanier added. "Such a decision is most sensitive to our students and their families and reflects the budget we had hoped to recommend to the Board for its approval prior to the governor's June 26 proposal."

Implementing the lower tuition amount entails risk because significant additional cuts would need to be implemented if the anticipated appropriation does not occur. In addition to the significant internal cuts already adopted, the University would need to eliminate its planned reserve, reduce employee benefits, implement millions of dollars of additional cuts on very short notice in the midst of the academic year, and levy a mid-year tuition increase.

"The $61 million cut proposed recently would have hit Penn State students hard, reducing our appropriation to the 1997 level, yet since then our enrollment has grown by 13,657," Spanier said. "Even with significant cuts and layoffs at the University, that scenario would have pushed tuition increases close to 10 percent for some students. We hope that is now off the table and we don't have to reconsider it for the spring semester."

Penn State's appropriation has been cut five times during the past decade, resulting in students and their families being required to pay higher tuition to make up the difference that significant internal cuts have not been able to cover. This year, all employees have forgone pay increases. In total, more than $50 million in expenses have already been trimmed from the University's budget this year, while adding funds for student aid.

Pennsylvania's four state-related universities are collectively the single largest provider of public higher education to the Commonwealth, serving more than 160,000 students, in addition to conducting a significant share of the state's research, economic impact, educational programming, high-level medical service and discovery, and agricultural outreach.

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The Pennsylvania State University, established by the Commonwealth of Pennsylvania, became the nation's first public land grant university following legislation by the U.S. Congress enacted in 1862.

Penn State enrolls 93,000 students on 24 campuses and the World Campus. The state's largest university, 75 percent of its undergraduates are Pennsylvania residents.  Penn State is the nation's most popular university, receiving more than 107,000 applications for admission this year.

Ten voting members of Penn State's Board of Trustees are appointed by the governor of Pennsylvania, including the governor himself and three members of his cabinet. Other trustees are elected by alumni and the state's agricultural societies or elected to represent business and industry.

(Media Contacts)

Last Updated June 17, 2010