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The University of Massachusetts is planning to iron out a major kink in the convoluted way it charges students, the Baker administration announced Friday.

For the first time in its history, the system will no longer have to return tuition it collects from students to the state, a change the university said won’t cost — or save — any money, but will make billing more transparent for students and families.

Right now, the five-campus state system each year collects tuition and fees from students. UMass can keep the fees, but must fork over tuition dollars to the state’s general fund. Then, year after year, UMass fights to get the money back in the form of the annual state appropriation to the university.


For years, UMass trustees have beat the system by charging miniscule tuition, but big fees, which fund the bulk of the cost to educate students, as an attempt to surrender as little money as possible to the state’s general fund.

Last year, for example, at UMass Amherst, in-state students paid $1,700 in tuition and $13,258 in fees.

For years, UMass officials have argued against the arcane system, saying it doesn’t make sense and subjects them to thousands of angry messages from students, confused about why the tuition cost is the small number and the fees are ballooning.

The setup has also allowed politicians to brag about low tuition, while actually obscuring the true cost of public college.

Under the new system, a change that comes as part of the budget Governor Charlie Baker signed Friday, trustees will set both tuition and fees, and they are expected to make tuition the big number and fees the smaller, like most universities nationwide.

The change “hopefully will make it easier for UMass to manage its finances in a more efficient and effective way,” said James A. Peyser, Baker’s education secretary. UMass president Martin Meehan hailed it as a “a victory for transparency.”


Peyser said the system will create more “truth in billing” for families. It could also create an incentive for UMass campuses to increase enrollment, something the campuses have already done over the past decade.

In theory, Peyser said, the tuition system change will be budget-neutral: The Legislature will most likely reduce the amount it gives UMass by the amount of tuition the school will retain.

During Mitt Romney’s presidential bid in 2012, he bragged about a scholarship he created — the John and Abigail Adams Scholarship — that gives high-achieving Massachusetts students a “four-year, tuition free” ride. Romney didn’t mention the fact that tuition that year was a paltry $1,700 of the total cost of attendance that year, $23,167.

Partly because of the odd system, UMass has also ramped up its recruitment of out-of-state and international students, because the campuses have been allowed to keep all the money paid by those students, who also pay higher rates than Massachusetts residents.

In the same budget, Baker’s team also reduced the overall amount of money it gives UMass, to $526 million from the $532 million recommended by the legislative conference committee. That is up from $511 million the system received this year.

Meehan said that cut will make it difficult for the campuses not to run deficits this year.

The idea to change the UMass billing system has been proposed — and failed — many times. The agreement comes after much negotiation between the Baker administration, legislative leadership, and Meehan.


Senate President Stanley C. Rosenberg has fought for what is known as tuition retention for years. He praised the change but criticized the governor’s cut to the overall UMass budget.

“State appropriations are not keeping up with the cost of going to school,” he said.

The details of the new tuition system still have to be worked out. Peyser said a task force of officials from UMass, the administration, and the Legislature will work out issues such as how the state will handle benefits for UMass employees.

Other issues include what will happen to the Adams scholarship and also for students for whom the state waives tuition, such as veterans.

Every state university system has its quirks, but UMass is an anomaly, said George Pernsteiner, president of the State Higher Education Executive Officers Association.

“Any time you have a lot of complexities like that, I think people tend to not like it as well as something they can see,” Pernsteiner said.

Also in the budget, Baker reduced funds for a UMass Lowell satellite campus in Haverhill from $4 million to $2.5 million, Peyser said.

He left unchanged a $1 million appropriation for a commercial center on that same site, he said.

Contact Laura Krantz at laura.krantz@globe.com. Follow her on Twitter @laurakrantz.