Universities deal with state funding cuts amid tuition freeze calls
Facing deep state and federal funding cuts and political pressure (with a little shaming) to keep college affordable, Indiana’s public universities are getting squeezed and forced to rethink their financial strategies.
The approach so far: freeze tuition for in-state students while shifting the burden to out-of-state and international students, trimming internal costs, and banking on enrollment growth to fill the gaps.
Governor Mike Braun (R) and the Indiana Commission for Higher Education strongly urged the state-backed colleges and universities to hold the line on tuition increases for in-state students. All seven institutions complied, announcing tuition freezes through at least the 2026–27 academic year.
But behind the scenes, universities are scrambling to recoup millions in lost revenue due to the 5.0% cut in state appropriations, along with an additional ask to hold back 5.0% this fiscal year and the next – a move driven by the grim $2.4 billion revenue forecast shortfall in the next two-year budget.
Tuition Freezes, But Not for Everyone
Purdue University, long the leader in tuition freezes, is entering its 13th and 14th consecutive years without raising in-state tuition. However, Purdue will increase fees for international students by $500 per semester next year, and by $1,000 per semester for some new nonresident students the year after.
Indiana University is taking a similar approach. While in-state undergraduate tuition at IU Bloomington will remain at $12,143 annually through 2027, nonresident students will see tuition rise by over $400 each year. Out-of-state undergraduates will face a 1.0% increase, and graduate students – both in-state and out-of-state – will see 2.0% annual hikes.
Despite the freeze, IU expects to generate $36 million more in tuition revenue by 2026-27, thanks to the out-of-state increases and projected enrollment growth. We told you in our last issue as well that the university is also cutting costs by eliminating vacant positions, reducing employee benefits, and slashing travel and supply budgets – all part of a plan to offset almost $100 million in lost state and federal funding.
Indiana State University is emerging as one of the hardest hit by tough financial decisions. ISU eyes a 5.0% tuition hike each of the next two school years for full-time nonresident students while it plans a tuition freeze for in-state students.
The university, whose enrollment has declined significantly in recent years, contends that the increase for non-resident students is necessary to support ISU’s operating budget.
ISU faces a $3.9 million budget cut for the 2025-2026 academic year, as part of the budget haircut and shave with the five percent holdback provisions. In response, ISU eliminated 32 positions, including high-level roles such as the vice president for student affairs; director of communications; assistant to the president for government affairs; and the executive director of diversity, inclusion, and belonging. Of those, 20 were vacant and will remain unfilled . . . while 10 current employees will receive severance packages.
ISU President Mike Godard, who is just now wrapping up his first year leading the institution, proposed additional cost-saving measures, including a salary freeze, delayed capital projects like renovations to Holmstedt Hall and Root Hall, and a focus on essential maintenance only. The university will also tighten discretionary spending, prioritize essential hires, and optimize academic scheduling to manage faculty resources more efficiently.
Looking ahead, ISU plans to streamline administration, invest in enrollment growth strategies, and concentrate on core academic missions to navigate the ongoing financial strain. Despite the cuts, Dr. Godard still wants to focus on the university’s commitment to resilience and long-term planning. Funding will still be prioritized for areas such as enrollment – on which Dr. Godard has assumed a laser-focus since he started last summer. He created a vice president of enrollment management position last year to work on the university’s enrollment issue.
ISU’s out-of-state students, however, are not happy with the proposed increases to out-of-state tuition, Sue Loughlin writes in the Terre Haute Tribune-Star. Graduate students at the tuition public hearing voiced concerns about the financial strain the increase would cause, especially for international students who face restrictions on employment and already struggle with living expenses. Grace Martin, a doctoral student from St. Louis, said the added cost would make it even harder to afford rent and bills.
Some Freeze for All, Use Other Methods
Not all Indiana colleges are shifting the burden to nonresidents. Vincennes University, Ivy Tech Community College, and the University of Southern Indiana have proposed tuition freezes for all students, regardless of residency. These institutions typically serve fewer out-of-state students.
Bear in mind too, that Ivy Tech is also among the hardest hit by budget cuts. Recall from our last issue that the college will lay off 202 employees statewide to address a $54 million shortfall over two years. Outgoing President Sue Ellspermann, herself a former state lawmaker, points to the state cuts and tuition freeze pressure as a reason driving the layoffs.
Ivy Tech employs no tenured faculty, allowing it to adjust staffing levels more flexibly as enrollment and industry needs change. The college has also previously eliminated certain student fees, costing it more than $9 million annually in lost revenue.
Vincennes University’s new budget assumes stable enrollment over the period, despite the state funding cuts. While tuition remains flat, student housing fees will increase by 3.0% over the next two years. Additionally, two faculty benefit packages will see increases under the new budget.
Ball State University is also freezing in-state and out-of-state tuition and mandatory fees, but will raise room and board costs by 2.0%, adding up to $318 annually for students in the most expensive housing. These auxiliary services operate on separate budgets, but the increase still affects students’ overall cost of attendance.
Ball State faces a $14 million annual state operating reduction – a “swing to the neck,” as described by its president this month. “We began doing budget planning in the fall in anticipation of this day, and the change between what we were predicting on April 15 to what we found out by May 15 was a $20 million swing to the neck,” Ball State University President Geoffrey Mearns stated during the trustee meeting on June 13.
To manage a $14 million annual funding loss, Ball State is relying on a large incoming freshman class and reallocating student services fees to the general fund, the Ball State Daily News reports. While faculty salaries will not increase, eligible employees will receive one-time bonuses of $1,500 (full-time) or $750 (part-time).
Faculty groups criticized the lack of raises and called for more inclusive decision-making. The Ball State chapter of the American Association of University Professors (BSUAAUP) recently reported low morale and distrust in leadership due to stagnant wages and legislative pressures on academic freedom.
The Bigger Picture Looking Ahead
The tuition freezes may reflect a broader shift in how universities market themselves. Christopher Mullin of the Indianapolis-based Lumina Foundation tells Jarred Meeks of State Affairs that raising tuition as a signal of quality may have reached its limit. Instead, institutions are now trying to signal affordability to attract students.
But the strategy has its limits.
One-third of students at Indiana’s public universities are from out of state, and most attend IU Bloomington and Purdue West Lafayette. At both campuses, especially Purdue, nonresident enrollment has grown faster than in-state enrollment since 2019 – a trend that may accelerate as some universities look to nonresident tuition to balance their books. At Purdue, the number of nonresident students surpassed the number of resident students four years ago, in 2021, which in turn has contributed to funding its decade of in-state tuition freezes.
Relying on outsiders coming to Indiana for school may also become more uncertain as the Trump Administration reworks the approval process for student visas, looking to make it more restrictive. R1 institutions like Purdue and IU often attract international students, which could fill those funding gaps . . . but how long will that last?
There’s also the issue that lawmakers are becoming more aware of the fact that some state universities are enrolling more out-of-state students, though no hard legislative action has happened yet. But, if you recall back to the 2025 legislative session, the original version of SEA 448-2025 from Sen. Greg Goode (R) of Terre Haute called for metrics to require that state institutions admit a certain percentage of Indiana residents each year. Sen. Goode – a former ISU administrator – was not enamored with the language at the time, and it was stripped . . . but he indicated he has a growing concern about Indiana students not getting admitted into state universities.
Another problem – cutting costs generally becomes a trend that experts warn could trigger a broader decline in the state’s economic performance.
“Colleges and universities are key economic engines for states. They not only develop a skilled workforce but also drive research that often benefits local industries,” Tom Harnisch, vice president of government relations at the State Higher Education Executive Officers Association, tells Inside Indiana Business.
Governor Braun expressed confidence in the state universities weathering this financial storm, instructing them to “address the reductions in the same way as other state entities: by refocusing on their core missions, finding efficiencies, eliminating redundancies, and identifying ways to streamline the delivery of higher education.”
Universities are closing down diversity, equity, and inclusion offices and terminating the respective administrators and employees overseeing those departments.
There is also the upcoming massive degree review process, per state law, that ICHE will undertake, looking to cut degrees that graduate few students each year.
The commission will review programs that, over the past three years, have averaged fewer than 10 graduates for associate degrees, 15 for bachelor’s degrees, seven for master’s degrees, and three for education specialist or doctoral degrees. Depending on how strict the commission is, this could result in the elimination of maybe half of Indiana’s bachelor’s degrees . . . though we don’t expect the review will be that cutthroat.
While cutting back the state’s public university and college degree programs seems, on the surface, like it might result in some substantial cost savings, we’re hearing that universities aren’t expecting much, considering how many classes overlap various degrees. Ending a certain degree program may not mean that all the classes associated with it also cease to exist.
All of this is also assuming the state appropriation reductions are temporary, just for this biennium, along with the push for tuition freezes just remaining for these next two academic years.
Bottom line – as Indiana’s state colleges navigate shrinking budgets and political pressure, they’re walking a tightrope: keeping college affordable (at least for the students who live here) . . . while finding other ways to pay the bills. Whether this strategy is sustainable or equitable remains to be seen.