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Students Pay Larger Proportion of Higher Education Costs

by Michael Higham, published

proportion of higher education costs Credit: zimmytws /

Since the 2008 recession, college tuition has steadily increased while public funding continues to lag. The Center on Budget and Policy Priorities (CBPP) analyzed the relationship between the two contributors to college funding. The CBPP suggests that a steady flow of new revenue and fewer tax cuts would result in a better state of higher education.

States are spending 28 percent less in higher education and students are paying 27 percent more in tuition in just five years. The dollar amounts are translated to a decrease of $2,353 in state funding and an increase of $1,850 in yearly tuition per student.

The three states that have made the largest cuts in higher education funding are Arizona (50.4 percent), New Hampshire (49.9), and Oregon (43.6). As for per-student spending in dollar amounts, the three largest state cuts came from New Mexico ($4,775), Louisiana ($4,715), and Alabama ($4,546).

The three states where public colleges have raised tuition the most are Arizona (78.4 percent), California (72.0), and Florida (67.3). Highest tuition hikes in dollar amount came from colleges in Arizona ($4,275), Washington ($4,190), and California ($3,923).

The CBPP graphs the trend since the 1987 fiscal year:

Credit: Center on Budget and Policy Priorities

Proportion of Higher Education Costs since 1987

Tuition fees account for almost half of total educational revenue for public colleges. The hike in tuition fees should mean that reductions in state funding are offset, but it is not the case.

CBPP states:

"Because tuition increases have not compensated for the loss of state funding, public colleges and universities have simultaneously cut spending to make up for declining state funding."

Students are paying more in fees, but are receiving less in services. The CBPP concluded states could have mitigated the impact of losses in higher education:

"These cuts were in part the result of a revenue collapse caused by the economic downturn. But they also resulted from misguided policy choices. State policymakers relied overwhelmingly on spending cuts to make up for lost revenues. They could have lessened the need for higher education funding cuts if they had used a more balanced mix of spending cuts and revenue increases to balance their budgets."

Only two states, North Dakota and Wyoming, have increased per-student spending in public higher education. Both states have invested 16.5 percent and 7.5 percent more, respectively.

With higher tuition rates, students end up paying more and often resort to student loans. As of today, total student debt in the U.S. is approaching $1 trillion.

Investing in public colleges to mitigate institutional cuts instead of loaning money to pay the increasing tuition fees may be beneficial. It is hard to tell if the absence of government-sponsored student loans would drive students to look into higher-interest private loans.

The U.S. Department of Education invested $126 billion in student loan programs for FY 2013.

For consistent readers on the condition of higher education, the notion of state investment into colleges will better the economy may grow tiresome. However, it is the driving principle for publicly-funded higher education. The CBPP estimates that by 2018, 62 percent of U.S. jobs will require some form of higher education.

States are lacking the ability to invest in colleges and universities, shifting the proportion of higher education costs to students.

Data from the CBPP is adjusted for inflation. The entire report can be downloaded here.

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