Michigan State University (MSU) is preparing for significant financial adjustments in response to ongoing budgetary challenges and shifts in federal funding.
In a letter to the university community on May 5, 2025, MSU President Kevin Guskiewicz announced that the institution has reached the “difficult conclusion” that it must adjust its financial path. He cited changes in federal policies and rising healthcare costs as key factors contributing to the university’s financial strain.
“Unfortunately, federal changes are compounding our existing financial challenges, including our ongoing efforts to balance the university’s budget,” Guskiewicz wrote. “Over the past few years, we—like other peer universities, companies, and organizations—have faced some difficult financial headwinds, with rising health care costs being of particular concern.”
To address these issues, university leaders are conducting a comprehensive review of MSU’s finances using a “three-horizon time frame.” The first horizon involves examining college and unit budgets, vacant positions, nonpersonnel expenses, and enrollment trends. The second focuses on setting the annual budget in June, while the third considers larger, long-term savings strategies.
While specific changes have not been detailed, Guskiewicz acknowledged that “hard decisions” will be necessary, potentially impacting members of the university community. He emphasized that more information will be provided in a timely manner.
This announcement comes amid broader financial pressures on higher education institutions. MSU’s proposed operating budget for the 2024–25 fiscal year totals $3.65 billion, a 9.8% increase from the previous year, driven mainly by significant increases in contracts and grants activity.
The budget includes proposed tuition increases of $470 per year for full-time undergraduate students and MBA students, with graduate student rates increasing by $26 per credit hour.
Additionally, the university’s housing and dining rates are set to rise by 2.9% for the 2025–26 academic year, following a 6.89% increase the previous year. These adjustments aim to address rising wage costs, especially increases in minimum wage and significant increases in employee health care costs, alongside ongoing investment within Residential and Hospitality Services (RHS) infrastructure.
Federal changes, including the implementation of the FAFSA Simplification Act, have also impacted financial aid processes. MSU’s Office of Financial Aid began processing 2024–25 FAFSA data in April 2025, later than usual, due to nationwide delays related to the new FAFSA system. These delays may result in revisions to award amounts after packages are generated.
As MSU navigates these financial challenges, university leadership remains committed to transparency and will continue to communicate updates to the community as decisions are made.
