HERSHEY -- The University wants to participate in Gov. Robert P. Casey's tuition challenge grant program, but that could mean stiffer tuition increases for graduate and out-of-state students for the second consecutive year.

University President Bryce Jordan presented an update on Penn State's appropriation request to the University Board of Trustees Saturday. But his description of the proposed tuition challenge grant caused Graduate Student Association President Ken Martin to express concern.

"I would hope that we could include graduate students in the tuition challenge grant program," Martin said.

Last July, for the first time, the University instituted a two-tiered tuition increase. While Pennsylvania resident undergraduates paid 4 percent more in tuition this year than in 1988-1989, out-of-state, graduate and medical students faced a 9.4 percent increase.

Casey's proposed budget for this year offered the University an overall 2.8 percent increase. The tuition challenge grant, which offers $100 additional state money per student to any school that raises tuition $100 or less, could make that increase 4.86 percent, Jordan said.

The $100 tuition cap was changed last year to a 4 percent cap as the budget was reviewed by the state House and Senate. The University would like to see that change again, Jordan said.

However, at the same time, the General Assembly changed the process for distributing additional funding from a per student basis. Each school received an equal portion of the funds.

This meant Penn State received only $71 per student while the University of Pittsburgh received $109 and Temple University received $129, Jordan said. The University hopes to establish a percentage tuition increase, but preserve the per student division of funds, Jordan said.

The University has asked the state for a 12.7 percent increase in appropriations. Traditionally when Penn State receives less money than it requested from the state, the trustees make up the difference by raising tuition.

However, this year a 6 percent tuition increase was built into the University budget.