College Subsidies Hit Decade Low as Students Pay at Least Half of Their Education Cost for the First Time

• 07/29/14

WASHINGTON, DC — Subsidies for public higher education institutions have hit a 10-year low while students for the first time pay on average half or more of their education’s cost, finds a report by the Delta Cost Project at the American Institutes for Research (AIR). Community colleges, the analysis also shows, are posting the lowest level of spending per student in a decade.

“Students are paying an ever-larger share of the costs colleges and universities incur to provide an education — particularly students at public institutions,” report lead author and AIR principal researcher Donna Desrochers says, “Research universities are still feeling the recession’s aftermath, with academic spending per student declining for two years straight while spending at other four-year institutions rose.”

The authors used 2001-2011 data compiled by the Delta Cost Project from information institutions reported to the U.S. Department of Education. Key findings include:

Student Share of Costs/Subsidy

• For the first time at four-year colleges and universities, students now pay half or more on average of the full institutional cost to provide their education — an 18- to 22-percentage point increase at public four-year institutions over the decade.
• Institutional subsidies (funded by state and local appropriations or other university revenues) dropped to a decade-long low in most types of colleges and universities, averaging $6,000 to $7,000 per student at public four-year institutions.
• Subsidies declined by 2 to 4 percent at public non-research institutions in 2011 — a slowdown compared to 2010, when declines averaged 8 percent or more. Public research universities were hit hardest, suffering a second year of 8 percent declines.

Spending

• In the recession’s wake, spending began to stabilize, but education and related spending per student (which includes costs for instruction, student services, and a portion of administration and maintenance) dropped by roughly 1 percent at public and private research universities and community colleges in 2011.
• Despite the 2008 recession and subsequent recovery, average education and related spending on each student at four-year institutions was still higher in 2011 ($12,600 to $16,000, on average) than it had been five and 10 years earlier. But for the second year in a row, community colleges posted the lowest spending levels in a decade (averaging $9,600 per full-time equivalent student).
• The student services share of education and related spending continued to grow over the decade, especially at private institutions, with the largest jump at bachelor’s institutions (averaging 17 percent in 2001, compared with 20 percent in 2011).

Revenues

• Public institutions increasingly rely on student tuition revenues, which nearly equaled or exceeded state and local funding in 2011.
• At public institutions, state and local funding per student dropped 2 to 4 percent in 2011. This is much lower than the 6 percent to 15 percent declines observed during the recession.
• State and local support reached a decade-long low in 2011, averaging about $6,000 to $8,000 per student at public four-year colleges and universities. Revenue generated per full-time student enrolled at a public research or private institution increased an average of 1 to 4 percent in 2011, while unchanged at other public four-year institutions.
• Rising revenues at public research universities and private colleges were boosted by private gifts, investment returns, and endowment income and auxiliary services (residence halls, meal services). Public research universities also relied on increases in net tuition revenue more than private institutions did.

Outcomes

• After recent declines, public institutions produced more degrees in 2011. Degree productivity declined slightly at private research universities in 2011, but rose steadily during most of the decade at both private research (3 percent) and master’s institutions (7 percent).
• Public institutions lowered overall production costs per degree in 2011, but only community colleges had considerably lower costs by the decade’s end.

To read the full version of “Trends in College Spending: 2001–2011,” visit www.deltacostproject.org or www.air.org. For information on individual colleges and universities performance on these metrics, visit the Trends in College Spending Online website.

About AIR
Established in 1946, with headquarters in Washington, DC, the American Institutes for Research (AIR) is a nonpartisan, not-for-profit organization that conducts behavioral and social science research and delivers technical assistance both domestically and internationally in the areas of health, education, and workforce productivity. For more information, visit www.air.org.