Years of Cuts Threaten to Put College Out of Reach for More Students

by Michael Mitchell and Michael Leachman, Center for Budget and Policy Priorities May 13, 2015 (excerpts)

Even as states restore some funding that was cut in recent years, their support for higher education remains well below pre-recession levels, straining college affordability -- especially for students whose families struggle to make ends meet.

Many public two- and four-year colleges and universities avoided significant tuition increases for the second year in a row, as most states continued to replenish higher education support. Still, 13 states further cut funding in the past year. And in almost all states, higher education support remains below what it was in 2008, just before the most recent recession.

These cuts led to steep tuition increases that threaten to put college out of reach for more students. They also raise concerns about diminishing the quality of education at a time when a highly educated workforce is more crucial than ever to the nation's economic future.

After adjusting for inflation:

• Forty-seven states -- all except Alaska, North Dakota, and Wyoming -- are spending less per student in the 2014-15 school year than they did before the recession.[2]
• States cut funding deeply after the recession hit. The average state is spending $1,805, or 20 percent, less per student than before the recession.
• Per-student funding in Alabama, Arizona, Louisiana, Pennsylvania, and South Carolina is down by more than 35 percent since the start of the recession.
• In 13 states, per-student funding fell over the last year. Of these, three states -- Kentucky, Oklahoma, and West Virginia -- have cut per-student higher education funding for the last two consecutive years.
• In the last year, 37 states increased funding per student. Per-student funding rose $268, or 3.9 percent, nationally.

Deep state funding cuts have had major consequences for public colleges and universities. States (and to a lesser extent localities) provide roughly 53 percent of the revenue that can be used to support instruction at these schools.[3] When this funding is cut, colleges and universities look to make up the difference with higher tuition levels, cuts to educational or other services, or both.

Indeed, since the recession, higher education institutions have:

• Increased tuition. Public colleges and universities across the country have increased tuition to compensate for declining state funding and rising costs. Annual published tuition at four-year public colleges has risen by $2,068, or 29 percent, since the 2007-08 school year, after adjusting for inflation.[4] In Arizona, published tuition at four-year schools is up more than 80 percent, while in five other states -- California, Florida, Georgia, Hawaii, and Louisiana -- published tuition is up more than 60 percent.

  These sharp increases in tuition have accelerated longer-term trends of college becoming less affordable and costs shifting from states to students. Over the last 20 years, the price of attending a four-year public college or university has grown significantly faster than the median income.[5] Federal student aid and tax credits have risen, but on average they have fallen short of covering the tuition increases.

• Cut spending, often in ways that may diminish access and quality and jeopardize outcomes. Tuition increases have compensated for only part of the revenue loss resulting from state funding cuts. Over the past several years, public colleges and universities have cut faculty positions, eliminated course offerings, closed campuses, shut computer labs, and reduced library services, among other cuts.

FIGURE 4

State Cuts Have Driven Up Tuition

As states have begun to reinvest in public higher education, tuition hikes in 2014-15 have been much smaller than in preceding years.[15] Published tuition -- the "sticker price" -- at public four-year institutions increased in 34 states over the past year, but only modestly. Average tuition increased $107, or 1.2 percent, above inflation.[16] Between last year and this year, after adjusting for inflation:

• Louisiana increased average tuition across its four-year institutions more than any other state, hiking it by nearly 9 percent, or roughly $600.
• Four states -- Louisiana, Hawaii, West Virginia, and Tennessee -- raised average tuition by more than 4 percent.
• In 16 states, tuition fell modestly, with declines ranging from $6 in Ohio to $182 in New Hampshire.[17]

Tuition remains much higher than it was before the recession in most states. Since the 2007-08 school year, average annual published tuition has risen by $2,068 nationally, or 29 percent, above the rate of inflation.[18] Steep tuition increases have been widespread, and average tuition at public four-year institutions, adjusted for inflation, has increased by:

• more than 60 percent in six states;
• more than 40 percent in ten states; and
• more than 20 percent in 33 states. (See Figures 5 and 6.)

FIGURE 5

FIGURE 6

Since the sticker-price increases have varied so much from state to state while federal grant and tax-credit amounts are uniform across the country, students in states with large tuition increases -- such as Arizona, Hawaii, and Washington -- likely experienced substantial increases in their net tuition and fees, while the net cost for students in states with smaller tuition increases may have fallen....

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