State funding for public institutions declined by 12 percent from 2003 to 2012 while tuition costs increased, making it more difficult for students and families to afford college, according to a recent report from the Government Accountability Office (GAO).
The office was asked by the Senate Committee on Health, Education, Labor and Pensions to study state policies that affect college affordability and identify ways the federal government can encourage states to make college more affordable.
Using data from the Department of Education and other sources, the GAO determined that state funding for public colleges decreased overall from $80 billion in fiscal year (FY) 2003 to $71 billion in FY 2012. And while the numbers of students enrolled in that time period rose by 20 percent, the median state funding per student dropped 24 percent from $6,211 in FY 2003 to $4,695 in FY 2012. The GAO noted that four-year public institutions experienced faster enrollment growth and “steeper” drops in median state funding per student than two-year institutions.
The study also examined the correlation between the impact of the recent economic recession on state budgets and higher education funding, as well as how those issues relate to rising tuition costs.
Revenue from state sources declined from 32 percent of total revenue in FY 2003 to 23 percent in 2012. Meanwhile, average net tuition for public schools rose by 19 percent between 2003 and 2012. The GAO found that the median published tuition prices for in-state students rose from $3,745 in academic year 2002-03 to $5,800 in academic year 2011-12, a 55 percent increase. The increase was about the same for four-year and two-year schools and out-of-state students also saw an increase, although it was lower, at 31percent.
Because of the decline in state funding, tuition revenue became the top single source of revenue for public schools, growing from 17 percent in 2003 to 25 percent in 2012. In addition, states gradually shifted from need-based grant aid to merit-based aid during this time period, in effect targeting smaller portions of money to students with the greatest need.
The effect of these trends has led to a large decline in college affordability for students and families, particularly those in the lowest income quartile where the ratio of net tuition to annual income was about four times higher than those in the highest quartile, the GAO noted.
Federal support for higher education, the GAO said, mainly focuses on funding student financial aid, which totaled over $136 billion in loans, grants, and work-study in FY 2013. In comparison, the Department of Education spent only $358 million on the College Access Challenge Grant and the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), which the GAO identified as two programs that could be related to college affordability and involve states.
While the GAO does not make any recommendations in the report, the office does note that there are several ways the federal government could expand incentives to states to improve college affordability, including creating new grants, providing more consumer information, and changing federal student aid programs. However, the benefits of such changes and approaches would need to be weighed against any potential challenges, including the cost to the federal government and consequences for students, the GAO concluded.
Publication Date: 12/22/2014