ALBUQUERQUE—The University of New Mexico Board of Regents approved an innovative tuition model that offers an incentive for students to graduate in four years and predictability in financial planning for students and the university.

Regents passed a 3 percent tuition increase for next year. They also passed a plan that projects 3 percent increases in the coming years with no tuition charge in a student’s eighth semester if the degree is completed within four years.

The board also unanimously approved a 4.6 percent increase in fees for next academic year to pay for programs and initiatives supported by students. Combined, the overall increase for tuition and fees for next school...