Minnesota college leaders eye tuition hikes as costs rise and state funding flatlines

Dive Brief:

• Minnesota’s public colleges could institute substantial tuition spikes in the next academic year, after state officials have so far failed to meet funding requests. 
• College officials’ latest projections estimate students could see price increases ranging from 4% to 9.9% to offset budget gaps, according to a presentation at a Minnesota State system board of trustees meeting this week. Most colleges and universities are modeling an increase of 8%. 
• Those proposed increases come as analysis from the Minneapolis Federal Reserve showed enrollment in public Minnesota colleges increased substantially in the 2024-25 academic year — up 12% at two-year institutions and 4% at four-year institutions.

Dive Insight:

Leaders at public institutions in Minnesota are having to grapple with state funding that will likely remain flat while inflation continues lifting costs for college operations. 

Minnesota State Board of Trustees, which oversees 33 institutions, requested $465 million in new funding in the state budget covering fiscal 2026 and 2027. 

But so far, state executive and House budget proposals include no funding increases for the system, said Bill Maki, vice chancellor of finance and facilities for the Minnesota State system, during Tuesday’s presentation. He noted that the state Senate offered additional funding but only a fraction of what was asked for — $100 million.

The muted proposals from the state — which is facing its own fiscal shortfalls — would leave colleges on their own in filling budget gaps created by increasing costs and financial needs, such as maintenance backlogs. 

Modest tuition increases would still leave substantial structural deficits, Maki noted. A system-wide tuition increase of 3.5% would still leave a $65.1 million budget shortfall in fiscal 2026. Even a 9% tuition hike would mean a $23.8 million gap. 

“Regardless of what level of tuition increase may be approved by the board, every one of our colleges and universities is going to have to implement budget reallocations and reductions in order to cover inflationary costs,” Maki said. 

Complicating things, as the chancellor pointed out, is that institutions have to set tuition rates before they fully know their costs for the year. 

To date, the Minnesota State system has remained relatively strong financially. The system’s operating revenues increased in fiscal years 2024 and 2023, according to its latest financial statement. It ended fiscal 2024 with total revenues of $2.3 billion and a surplus of $108.9 million. 

Helping the system’s finances is the support it has received from the state. In 2024-25, tuition accounted for about 30% of the Minnesota State system’s revenue, compared to 42% made up by state appropriations. 

And the state’s public colleges have beaten the nationwide trend of declining enrollment, reporting student growth in recent years.

Minnesota’s enrollment growth brought the state just short of its pre-pandemic levels in 2019, according to the Minneapolis Fed’s analysis. 

The state’s enrollment upticks in 2024 and 2023 also break a decade of decline in Minnesota and many of its neighboring states.

In explaining the state’s enrollment growth, the Fed’s analysis pointed in part to Minnesota’s recently implemented North Star Promise. The program offers free tuition to students whose families make under $80,000 — a boon to enrollment and educational access but not necessarily to colleges’ coffers.