…the available research suggests that if state lawmakers increased appropriations for public colleges and universities, it would be unlikely to have an effect as large as advocates assume. More state funding appears to buy pennies on the dollar in lower tuition. That makes increasing appropriations for public colleges and universities an ineffective—even wasteful—policy for keeping tuition low. It also implies that grant aid might deliver more bang for the buck than larger state appropriations.
That makes some sense because in-state tuition rates are typically pretty low. Despite being so high that they may seem outrageous to some people, in-state tuition is less than the average expenditure on an undergrad at most publics. So no, more state funding probably would not lead to lower in-state tuition. It would be likely to lead to a greater number of in-state students at a public, however. When states disinvest in their publics, their publics that can increase OOS/International numbers do so to make up for the lesser revenue.
It would really help if the author specified list-price tuition or net-price (after state grants and scholarships) tuition in each case, since it often is not clear which is being referred to in each case.
Nice summary of the research. What the research ignores in the Iron Law of Institutions. The Iron Law of Institutions is: the people who control institutions care first and foremost about their power within the institution rather than the power of the institution itself. Thus, they would rather the institution “fail” while they remain in power within the institution than for the institution to “succeed” if that requires them to lose power within the institution.
Colleges are run by bureaucrats who want to increase their power and pay even if the organization that employs them fails. There is one chart in the article that summarizes tuition changes at major public university systems between 2004 and 2014.
There are large changes in tuition increases that vary significantly from changes in state funding, and the authors can’t find a mathematical correlation between the two. What they miss is that the two states that toed the line on tuition increases (Florida and California) have very active groups of citizens interested in keeps costs low and affordability high. The legislature in Florida has been very active in forcing the college system to maintain a low tuition in the face of budget cutbacks. It is no coincidence that the UC system and UF are routinely named as colleges doing to most for low income students.
If colleges don’t get this legislative pressure to keep tuition low, the bureaucrats will find reasons to increase tuition at twice the rate of inflation. Then you get public schools like Penn State and Illinois that are prohibitively expensive for middle-income state residents, and private schools with endowments worth $500,000+ per student charging $300,000+ for attending.
@Zinhead: PA effectively doesn’t have any public flagships. PSU, Pitt, and Temple are as public as Cornell’s contract colleges. They get some state funding and then they decide what they want to do but PA can’t order them around. Then you have the PASSHE schools, which are directionals at or barely above the CC level.
You must mean net tuition. UC historically has raised list tuition every recession. But it tries to increase financial aid so that middle and lower income students are less affected. Of course, the upper income are most affected, and they are better represented on these forums, so complaints are common. Increasing out of state students also brings in tuition revenue, at the cost of in state access.
Worth noting that the author (from AEI, not Brookings) does not cite any research using post-2007 data to support his argument. The 2008 recession caused a significant drop in state funding for higher ed over a several year period. This would be a more relevant period to study, and would highlight the consequence that @PurpleTitan mentions: shifting sources of tuition income for colleges and the resulting drop in in-state access/affordability.
Purdue University just DECREASED their instate tuition to just below $10k per year. Their room and board are just over $10k. All in all a great value for an Indiana resident especially one who wants to study engineering.
In the state of Michigan, state support used to cover over 70% of the cost per student. Now state support covers under 30%. To think that reduction has had no impact on the tuition paid by students is absurd. Seeing that the research is an AEI product explains the finding.
I am curious if the percentage of the state budgets as a total dollar value allocated to higher education has increased, decreased or stayed the same in relation to the overall state budget. If the number of students increases significantly or the cost of education increases significantly the amount of state contribution per student is bound to decrease even if the state increases the dollar value of their contribution.
To use a different example. Let’s say my employer had been paying $300/month toward my health insurance 20 years ago and that covered 75% of my $400 insurance since then I’ve added 3 kids to my insurance and the cost of insurance has gone up 50%. My insurance is now $1200/month because of Cost increases and the 3 kids added to the insurance. My employer now pays $500 per month or around 42% of my health insurance. Did my employer decrease his contribution?
@lvvcsf: Someone can go look at the numbers, but I’m almost certain that as a percentage of the state budget, spending on higher ed has decreased in almost all states.
State budgets have been under a lot of pressure, as health care and pension cost have sharply increased (and become a large % of the overall state budget). Higher Education was much easier to cut during the Great Recession (even more so than K-12 funding). When funding has to be cut, Higher Education will always lose out. Especially since they can always raise tuition rates, to help compensate for the cut in state approbations (something that can’t be done with healthcare and pension cost).
Since the economy has improved, state funding for higher education has also improved.
So, yes, recently (since 2008) as approbations decreased, tuition rates increased. However, if you look at it from a longer time scale, it’s clear the tuition rates also increased, when state approbations increased, The tuition rate increase trend is always positive. It’s RARE that a public university cuts it’s tuition.
The crime wave of the 1970s to 1990s (and its reactions like the drug war and “three strikes” laws) also put state budgets under a lot of pressure by greatly increasing prison spending (and, of course, prison guards and other employees got health care benefits that rose in cost as well). State budget priorities changed from the optimistic future of a better educated next generation to warehousing the failures of the past.
Assuming a linear model. Which is a big assumption. I’m sure there’s a delayed effect as it’s hard to turn university budgets in new directions quickly.
That is my point. PSU and the like are public institutions that are supposed to serve the public good. Instead, they primarily benefit the bureaucrats and administrators that run them and screw over the public.
Uh, @Zinhead, that’s not my point. The PA government essentially privatized PSU, Pitt, and Temple. Those three schools are as “public” as Cornell is now.
@PurpleTitan - PSU will get more than $225,000,000 in funding from the state of Pennsylvania in 2017, and Pitt will get around $150,000,000.
The state funding at other similar institutions are as follows:
Ohio State - $333,000,000
Michigan State - $279,000,000
Alabama - $144,000,000
Virginia Tech - $252,000,000
This idea that PSU and Pitt are essentially privatized is a red herring meant to distract taxpayers from the fact that these schools are terribly mismanaged. BTW, in-state tuition at PSU is nearly $18,000 while Pitt charges $18,600. Both are among the highest in-state rates in the country.
