While a more diverse population of students has been enrolling in higher education, this trend is likely to reverse if tuition costs — coupled with relatively low per-student funding from states — continue to rise, according to a new report from the Center on Budget and Policy Priorities (CBPP).
The report’s authors suggested that to encourage more students to continue pursuing college degrees, policymakers should prioritize need-based aid policies and abandon performance-based funding models.
“The potential benefits of a college degree are significant, with greater lifetime earnings for those who obtain a bachelor’s degree relative to those who only receive a high school diploma,” the authors wrote. “But cuts to higher education, rising tuition, and stagnant household earnings make it difficult for today’s students — a cohort more racially and economically diverse than any before it — to secure those benefits.”
States have been increasing spending for higher education for the past few years, but per-student funding is still 13% below 2008 levels (or $1,220 less) at both four- and two-year institutions — despite the fact that state revenues have risen above pre-recession levels, the report found. Between 2008 and 2018, when adjusted for inflation, 19 states cut per-student funding by more than 20%, and six of those states cut funding by more than 30%.
At the same time, the average, published cost of tuition at public, four-year institutions rose by 37%, or $2,708, between 2008 and 2018. Specifically, tuition grew by more than 60% in seven states and by more than 40% in 21 states. While state funding for financial aid programs has increased between 2008 and 2018, the average net price at public, four-year institutions still rose by 24%, or by $2,920.
The report’s authors wrote that rising tuition costs “may harm students of color and reduce campus diversity,” citing a study that found that a $1,000 tuition increase for full-time freshman at less-selective institutions “was associated with a 4.5% percent drop in class diversity.” They also wrote that high sticker prices deter low-income students from enrolling in higher education as well, and that “low-income families’ relative lack of knowledge about the admissions and financial aid processes may exacerbate the problem.”
The authors suggested states not only invest more money to support public institutions, but that they “implement smarter state financial aid policies and ensure that dollars go to the schools that need it most.”
Specifically, they wrote that states should prioritize need-based aid, instead of focusing their limited funding on merit-based aid programs. In the 2016-17 academic year, state institutions awarded students $10.7 billion in financial aid — 98% of which went to undergraduates. Of that amount, 24% was awarded to students who earned high GPAs in high school or reported top SAT and ACT scores, regardless of their household income.
“States would be better off bolstering need-based aid programs, simplifying and consolidating programs to reduce confusion and encourage greater enrollment, and building design aspects into these programs that not only encourage enrollment but also encourage timely completion to reduce costs to both the state and students,” the authors wrote.
The authors also suggested that states move away from performance-based funding models for their colleges and universities — currently the practice in 32 states — that “benefit the most well-resourced schools at the expense of smaller regional institutions.” The authors noted that “performance funding is less effective than policymakers might hope,” in part due to years of funding cuts that have left certain public colleges, particularly two-year colleges and regional institutions with smaller endowments, struggling to meet the goals intended to boost performance.
Instead, the authors wrote, “by pursuing policies that help more students pursue affordable postsecondary education, lawmakers can help build a stronger middle class and develop the entrepreneurs and skilled workers a strong state economy needs.”
Publication Date: 10/24/2019