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The University of Tennessee Board of Trustees approved a $2.05 billion system-wide budget Thursday and set student tuition and fees for all campuses.

UT Knoxville in-state undergraduates will pay between 3 and 6 percent more for tuition beginning this fall. UT Knoxville now has three tuition rates as a result of changes to the 15-4 tuition model last year.

The Knoxville campus budget is $1.01 billion for fiscal 2014-15. The board approved a 6 percent tuition increase over last year’s rate for new in-state undergraduates and a 6 percent tuition increase for all in-state undergraduates who were admitted or readmitted before fall 2013. Students admitted or readmitted between fall 2013 and this summer will see a 3 percent tuition increase. The out-of-state portion of undergraduate tuition will not increase. This means out-of-state undergraduates will pay an average of 2 percent more in tuition. All new tuition and fee schedules are available on the One Stop website.

Trustees discussed the state’s challenges that led to a higher than anticipated increase in tuition. Slow revenue growth combined with increasing financial obligations constrained the state’s ability to fully fund the higher education formula for the new fiscal year, which begins July 1.

The Complete College Tennessee Act changed the higher education formula in 2010 to reward colleges and universities based on outcomes like student retention and graduation rates, among other factors. As the top performer, the Knoxville campus was set to receive an additional $6.3 million in appropriations, which was cut to $3.76 million this spring as business and other tax collections lagged behind projections.

“In building the annual budget, we must balance our costs with what the state provides to carry out our mission,” said Chancellor Jimmy G. Cheek.

Cheek said new revenue generated by the tuition increase will help support institutional scholarships to keep the net cost of attendance as low as possible. Additional funds will be invested for Top 25 initiatives, improving summer school, enhancing student support programs, and other academic priorities.

The board also approved the system’s policy on a Student Programs and Services Fee, which directs campuses to develop an opt-in procedure before the fall semester which allows students to expressly authorize payment toward student programs funded by the Student Programs and Services Fee (SPSF). The opt-in procedure applies only to the Knoxville and Chattanooga campuses.