After years of building up a quality academic record, months of anticipation and weeks of crafting the perfect application, the moment has finally come: acceptance into the University of Michigan.
Getting accepted is a joyous occasion — a testament to hard work and the pathway to an incredible college experience. However, there is an asterisk. The cost of education housing, textbooks and more is a reality check that can ground students and their families from this elation. Tuition, in particular, is an annually increasing source of worry, costing tens of thousands of dollars and showing no signs of slowing down.
It’s no secret that the University isn’t cheap. A glance at the numbers on the U-M tuition page can spark conversations on affordability. Yet, it turns out that such “sticker prices” are oftentimes not the true price of attendance.
So, how much does it really cost to attend the University — and is the cost worth the value? While the latter question is one that only students and their families can answer, this article seeks to clarify the former, simplifying the numbers that point to the real price. In the final installment of the Admissions Series, we’ll investigate why tuition is rising, what students are really paying and who is receiving financial aid.
Tuition Rate Trends
During the 2023-2024 school year, CollegeBoard reported that the average yearly undergrad tuition for a four-year public university was $22,620 and $59,680 for in-state and out-of-state students respectively. In comparison, the University’s average undergraduate tuition was $18,516 for in-state and $62,749 for out-of-state. In-state students enjoy a lower rate, but out-of-state students see higher than average rates, perhaps taking on the difference from in-state.
The 2023-2024 academic year also saw approximately a 10% increase for out-of-state tuition — the highest jump seen so far. In comparison, average four-year public school tuition rates saw an increase of about 3% that year, just less than the national inflation rate. Averaged tuition rates actually decreased over the past two decades when adjusted for inflation.
The University’s tuition rates increased by about 5% each year on average, with in-state tuition increasing about $500 and out-of-state tuition increasing about $1800 over the span of 24 years. For many students and their families, this poses a seemingly simple question: Why does tuition keep increasing?
The University’s Office of Public Affairs and Internal Communications cites the decline in state support as one of the most important factors in rising tuition costs. Tuition is the main source of revenue for many schools today, but state support provided the majority of funding a century ago. In 2000, state support made up 36% of the University’s General Fund. Now, it only makes up 12%.
Student tuition now supplies three-quarters of this General Fund. Students will have to continue paying more as cuts in state funding for higher education increases. The loss in state support isn’t just an occurrence at the University — it’s a nationwide trend. In 2018, the Center on Budget and Policy Priorities reported that funding for higher education declined by more than $7 billion over a decade.
Furthermore, the University’s Office of Public Affairs stated that the University is facing a $58 million increase in mandatory costs for 2025. As a result, tuition is likely to continue increasing. In fact, tuition is planned to increase by 3% (in-state) and 5% (out-of-state) per year as part of the 2025 fiscal year budget.
U-M Awarded Institutional Financial Aid
As fees increase, one question prospective students may ask is: Has financial aid increased in pace alongside these growing costs and how much does aid help cover this increase? The University is quick to note that its financial aid budget’s growth outpaces both its tuition and local inflation rates, citing that the 10-year average annual growth rate (2015-2025) for the undergraduate financial aid budget is 8.8%, more than double the percentage increases in tuition for both in-state and out-of-state.
Compared to 37 other public colleges, the University had the lowest state aid while awarding the second highest institutional aid. The University’s institutional financial aid includes any endowed scholarships, annual gifts and tuition funded grants (excluding athletic aid and tuition waivers). Need-based aid is awarded based on a student’s financial need, while non-need-based aid is typically awarded based on merit.
Being awarded financial aid means that students don’t pay the full listed tuition price, which is referred to as the sticker price. The net price is the real price students pay, equating to the sticker price minus received grants and scholarships (not including loans or work study). It turns out that about 60% of U-M students pay less than the sticker price. High sticker prices can be seen across the country: Vanderbilt University, for example, can cost up to $100,000. But in many cases, students end up paying much less. So why don’t colleges just lower their sticker price?
Some colleges have made this adjustment. Bridgewater College, for example, lowered their sticker price of $40,300 to $15,000 to more accurately reflect the true cost of attendance. But for others, especially top-ranked universities, maintaining greater tuition rates signifies the institution’s academic excellence. Columbia University costs $68,000. The University of Chicago has a quarterly fee of $21,267. A higher sticker price is meant to be associated with a higher quality education, even though such prices usually aren’t what students actually pay.
Like other institutions, the University provides net price calculators that estimate the true cost of attendance. Additionally, U-M net prices categorized by income can be found on the National Center for Education Statistics page.
So, sticker prices aren’t really indicative of a college’s actual price and students often receive aid that can drastically lower their cost of attendance. Institutions may flaunt statistics that claim low costs and high aid packages, but who is actually receiving this aid?
The University places a high emphasis on affordability for in-state students — a higher proportion of in-state students receive aid compared to out-of-state students. Whereas about three-quarters of in-state students receive some type of aid, only about half of out-of-state students receive aid, though out-of-state students had a greater average total aid expended for them. Public institutions often utilize out-of-state fees to subsidize in-state costs since many out-of-state students are from more affluent backgrounds compared to in-state residents.
U-M students who want to be considered for need-based financial aid must complete the Free Application for Federal Student Aid and College Scholarship Service Profile by March 31. Information from these applications is used to calculate the Student Aid Index, a federal estimate of the aid a student requires. Schools then use the SAI to determine need. For most colleges, including the University, need equals Cost of Attendance (includes both direct and indirect costs) minus the Student Aid Index and any other financial resources such as scholarships.
However, not everybody who applies for need-based aid receives it. If a student’s SAI and other financial resources are high enough to cover their Cost of Attendance, they won’t be considered to receive need-based aid.
Over the last decade, a greater proportion of U-M students are applying for need-based aid, even though a greater proportion of U-M students fall into high-income categories. This may explain why only about half of students who applied for need-based aid were determined to have need in recent years. However, almost all students who were determined to have need received financial aid and some students who weren’t determined to have need still received aid.
Once a student is determined to have need, the University distributes need-based aid in an eight-step order, including federal and state need-based grants and scholarships, tuition-based scholarships and institutional scholarships. U-M students may receive a variety of these funds, with awarded amounts depending on the student’s need.
Up until 2011, the University consistently met the full need of 90% of students with need. This percentage has decreased since then, but students are now getting greater aid amounts on average.
The eight financial aid categories also help make up the University’s flagship Go Blue Guarantee program, which was expanded last year. Established in 2018, the Go Blue Guarantee pledges to cover all tuition and mandatory costs (not including indirect costs) for eligible students. The University also provides several other need-based aid programs like the Victors Award and Go Blue Grant.
Students without financial need may still qualify for non-need-based scholarships and grants from the University. However, institutional non-need-based aid amounts are only a fraction of need-based aid packages. Furthermore, since 2011, the proportion of non-need students awarded non-need-based aid has decreased from an average of about 40% to 15%.
Notably, these numbers don’t include athletic scholarships or grants — also forms of non-need-based aid. Athletic scholarships and grants are typically awarded to 100-200 students each year, with an average dollar amount five times greater than regular non-need-based aid amounts. But in the past five years, athletic scholarships and grants have been eight to 10 times greater than regular non-need-based aid amounts.
Student Loaners and Loan Amounts
Financial aid doesn’t cover all costs of college. Along with rising tuition rates, borrowed loan amounts have increased as well. However, in recent years, the percentage of students who have taken out loans has decreased to about one-third of U-M graduates. The most recent class of 2024 has the lowest proportion of loan borrowers in the last two decades.
According to the University’s 20th almanac, in-state students are more likely to take out loans compared to out-of-state students, even though out-of-state loan amounts are greater, likely due to higher tuition fees.
As the University’s tuition and financial aid packages increase, students and families face both challenges and opportunities in the affordability of education. Across the U-M Admissions series, we’ve analyzed trends and patterns in the University’s admissions over the last two decades. Just as costs and financial aid have increased, we’ve seen how freshman profile test scores and student diversity have grown as well. All together, these numbers tell a broader story of how the University has changed, and how they may shape the future of the U-M admissions.
Michigan Daily Data Journalist Emma Peng can be reached at emmapeng@umich.edu
