Report: State Higher Education Funding Remains Below Pre-Recession Levels

By Brittany Hackett, Communications Staff

At a time when state funding is continually declining and tuition is on the rise, increases in federal student aid and tax credits are on average falling short of covering the rising cost of higher education, according to a report from the Center on Budget and Policy Priorities.

The report examines state levels of higher education funding, which remain “well below pre-recession levels.” State spending is up about an average of $450 per student, or 7 percent, among states that have increased higher education funding in the last eight years. However, states are spending 23 percent less per student nationwide this year than in 2008, and 37 states have cut that spending by more than 20 percent since the start of the recession.

Meanwhile colleges and universities have also had to increase tuition and cut spending as a result of the recession, further shifting costs from states to students and families. 

According to the report, public colleges and universities in 1988 received 3.2 times as much in revenue from state and local governments as they did from students. However, they currently only receive about 1.1 times as much from those entities as from students. Today, tuition revenue outweighs government funding for higher education in 23 states and in a few states-- including Colorado, Delaware, Michigan, New Hampshire, Pennsylvania, Rhode Island, and Vermont – students and their families carry the cost of higher education by a ratio of at least 2-to-1.

The increases in tuition and decreases in state aid can have “damaging consequences,” including lower enrollments, especially among low-income students, the report states. And while federal student aid and tax credits have risen, there is still a significant gap between the increases and what students can afford, leading to increases in student debt. Between the 2007-08 and 2011-12 academic years, the median amount of debt incurred by bachelor’s degree earners at four-year, public institutions increased from $11,900 to $14, 300, or 20 percent. 

The recession and lack of state funding has also led to an increase in federal grant aid. For example, the federal Pell Grant Program, between the 2007-08 and 2012-13 academic years, doubled from $16 billion to nearly $33 billion, reaching more students than before and providing them with more funding. In contrast, state financial aid for higher education dropped from $729 state grant dollars per student in 2007-08 to $680 in 2012, a nearly 7 percent decrease. 

However, the federal funding that “has played a critical role in partially offsetting state cuts to higher education” is in jeopardy, the report states, citing the 2015 budget passed by the House in April that would reduce Pell Grant funding by up to $125 billion over the next decade. The bill would also freeze the maximum grant amount and restrict program eligibility.

“Now is the time to renew investment in higher education to promote college affordability and quality,” the report concludes, adding that states should “avoid shortsighted tax cuts, which would make it much harder for them to invest in higher education, strengthen the skills of their workforce, and compete for the jobs of the future.”


Publication Date: 5/7/2014

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