Must Have College Degree

Enrollments in public colleges and universities grew 33 percent between 2001 and 2013. In 2012, enrollments increased by 275,000 students. California, however, saw a decline in enrollments of 50,000 students between 2010 and 2011.

This data comes from “State Higher Education Finance (SHEF), FY 2011,” published by the association of State Higher Education Executive Officers (SHEEO). The publication attributes the drop in California enrollments to the possible “effects of both higher fees and enrollment caps due to decreases in state appropriations.”

As state funding for public postsecondary education has declined, tuition has risen, and increasing numbers of students can only attend college by taking out enormous loans. Those who cannot qualify for loans cannot afford college.

“We are on an unsustainable course,” says Patrick M. Callan, president of the Higher Education Policy Institute in San Jose, CA. “We cannot continue on like this without seriously reducing the quality of higher education in the U.S.”

A comparison of the costs and available funding for public and private colleges and universities clearly shows that current funding levels, particularly at the state and local level, are insufficient… and growing more so.

The Surging Cost of College
“Trends in College Pricing, 2011,” from the New York City-based College Board, traces the increase in published tuition and fees between 2000 and 2012 for public and private colleges and universities.

Over the 12-year period, tuition and fees at public four-year schools grew at a rate of 5.6 percent per year over inflation. For the 2011-2012 school year, tuition and fees stood at an average of $8,244 per year for in-state students and $20,770 per year for out-of-state students.

At public two-year colleges, costs rose 3.8 percent per year above inflation. In the 2011-2012 school year, tuition averaged $2,963 per year.

Private nonprofit four-year institutions saw published tuition and fees rise 2.6 percent per year above inflation and now stand at an average of $28,500 per year.

Add $9,000 to $10,000 per year for tuition and fees for room and board, and even the lowest four-year price tag — for in-state public colleges — approaches $70,000. Four years in a private nonprofit institution now costs, on average, more than $150,000.

State and Local Funding for Public Institutions

State and local jurisdictions have traditionally funded public institutions with an eye to keeping tuition and fees as low as possible for in-state students. The recession of 2001 and the Great Recession wrecked that goal.

Last year, says SHEF, state and local funding support for public higher education totaled $87.5B — including $2.8B from the American Recovery and Reinvestment Act (ARRA). That total was higher than support provided in 2009 and 2010 but still below the $88.8B recorded in 2008, before the recession.

Lest you think state and local support appears to be coming back after the recession, SHEF calculates state and local support on a per-student basis. After adjusting for inflation and growing student populations, support per student in 2010 was $6,532, which is $500 less than 2009. In 2011, support per student fell once again, to $6,290.

More students, higher costs, fewer dollars per student. A bad formula.

Federal Loans
Fighting back against declining state support, the federal government has made an enormous commitment to higher education in the past decade. Here are the numbers, as presented by “Trends in Student Aid, 2011” from the College Board.

During the 2010-2011 school year, the federal government supported higher education to the tune of $169B through student loans, grants, tax benefits, and funding for work-study programs, up 164 percent since the 2000-2001 school year, when the federal contribution was $64B.

Loans are the largest portion of federal support. In 2010-2011, federal loans totaled approximately $104B, about $70B went to public and private undergraduate students and $34B went to public and private graduate students, up 139 percent since the 2000-2001 year.

Stafford loans accounted for $86B of 2010-2011 federal student loans made directly to undergraduate and graduate students. There are unsubsidized and subsidized Stafford loans.

Federal direct loans also included about $17B in unsubsidized plus loans for parents of dependent students and graduate and professional students.

Next came about $1B in Perkins loans for needy students. Several miscellaneous federal programs made about $131M in loans as well.

Federal Grants
According to “Trends in Student Aid, 2011,” federal grant programs provided $49B in postsecondary funding for the 2010-2011 year, up 249 percent since 2000-2001, when federal grants totaled just $14B.

The federal government makes Pell Grants based on financial need, usually to undergraduates. In 2010-2011, students with demonstrated need received $35B in Pell Grants, making this the largest federal grant category for higher education.

Second largest was grants to veterans and the military, which totaled about $12.5B.

In 2010-2012, Federal Supplemental Educational Opportunity Grants (FSEOGs) totaled $758M. These are grants to students with exceptional financial needs.

LEAP Grants totaling $64B in 2010-2011 went to states, which passed the funds through to colleges and universities that make the awards.

Federal funding covers a $1B program called Federal Work-Study that provides part-time jobs for needy students.

During the 2010-2011 school year, parents and students qualified for about $15B in tax credits for educational expenses first made available by the ARRA and since extended by Congress.

Two more federal programs, Academic Competitiveness Grants and SMART grants, combined to provided about $1B to needy students in 2010-2011. Congress failed to re-authorize these programs for 2011-2012.

Other federal programs totaling about $10B support programs that help prepare students to enroll in and complete college, fund institutional development for schools that enroll large numbers of minority and disadvantaged students, provide aid for schools serving Hispanic students, and help community colleges move graduating students into jobs.

What’s Next: The Presidential Campaign

While economic and employment issues may headline this year’s presidential campaign, the results will have significant consequences for higher education funding.

Democrats hope to preserve the current federal commitment and add a few innovations to help reduce costs.

Testifying before the House of Representatives’ Committee on Education and the Workforce, Secretary of Education Arne Duncan asked for a relatively modest net increase of $1.7B for higher education in fiscal year 2013. The request includes $1B for a higher-education “Race to the Top” program based on the successful K–12 model.

The postsecondary “Race to the Top” program will make grants to public institutions developing the best programs to increase affordability, quality, and graduation rates.

Another new program would use $55.5M to create a “First in the World” fund designed to help public and private postsecondary schools and nonprofit organizations develop strategies to improve college completion, lower costs, and increase quality. “Awards could be used to support such activities as using technology to redesign coursework, improve early college preparation to mitigate the need for remediation, and developing and implementing competency-based instruction and assessment,” says Secretary Duncan in his testimony.

The administration also requested $10B to expand and reform Perkins Loans, FSEOG grants, and Federal Work-Study programs. The funds would aim to assist colleges in efforts to enroll and graduate students from low-income families and hold down costs. Most of the money would go into the Perkins program. Part of this request also sought a $150M increase in Work-Study funds.

“These initiatives would help protect the significant taxpayer investment in Federal postsecondary student aid programs by creating incentives for states and public and private postsecondary institutions to provide good value to students at an affordable price,” Duncan testifies.

Other requests aim to maintain the federal investment in student loans and grants as well as programs that prepare high school students for college, put community college students to work, and support schools that enroll minority and disadvantaged students.

Mitt Romney, the Republican presidential candidate, has issued a white paper on education policy that attacks the Obama administration because “a flood of federal dollars is driving up costs and burdening too many young Americans with too much debt and too few opportunities … . A Romney Administration will tackle this challenge by making clear that the Federal government will no longer write a blank check to universities to reward their tuition increases and by supporting institutions that are pursing innovative operating models to drive down costs.”

Romney would also modify the Pell Grant program to focus dollars on “the students that need them most.”

While the Romney paper does not mention cuts to Pell Grants, Republican Representative Paul Ryan, who has released a 2013 budget popular among Republicans, wants to cut them.

Calling Ryan’s proposals devastating for higher education, Duncan’s Congressional testimony says that Ryan wants to cut “almost $3B from Pell aid to students in 2013, eliminating almost 400,000 recipients, and reducing the awards of 9.3M others. It would also hurt borrowers and students at a time when average student loan debt for a graduating senior is already more than $25,000.”

Duncan concludes his testimony with a warning to the Republican dominated House Committee: “In short, passage of the Ryan budget would propel the educational success of this country backwards for years to come, and that is a risk we cannot afford to take.”

And it would probably make it impossible to satisfy the higher education needs of the 2020 job market.