• From 1990-1991 to 2010-2011, total state appropriations rose from $65.1 billion to $75.6 billion. But state funding actually declined in relative terms. [From Bonddad: in inflation adjusted terms, this is a decline]
• If states had provided the same level of per capita support as in 1990-1991, they would have invested $80.7 billion in 2010-2011.
• If states had provided the same level of funding per public, full-time equivalent student as in 1990-1991, total appropriations in 2009-2010 would have equaled approximately $102 billion, an amount 35.3 percent higher.
• The proportion of their revenues that public colleges and universities received from state appropriations dropped from 38.3 percent in 1991-1992 to 24.4 percent in 2008-2009. Rising tuition, fees, and room and board represent a shift in support from the state as a whole to individual students and their families.
In addition, the financial aid system has failed to keep pace with escalating costs, forcing students and their families to rely on financing strategies that reduce their odds of completing school.
• States reoriented their financial aid programs away from need-based assistance to merit-based aid, which favors wealthier students. Students not only pay more than they used to but also borrow more extensively.
The state school system used to provide a great, inexpensive way for students without means to obtain an affordable college education. But the lack of investment in these systems over the last 20 years has led to an increase in tuition costs.
9 comments:
>But the lack of investment in these systems over the last 20 years has led to an increase in tuition costs.
I can settle for
>'was a contributing factor' to an increase in tuition cost.
I think the most significant growth is coming from gov. involvement in guaranteeing student debt combined with disallowing default of student debt. These two policies have allowed banks to lend risk-free to any student regardless of degree or school, flooding schools with easy (and almost infinite, until the system collapses) supply of cash.
-Long time lurker
Keep up the great posts!
Great post. I have no doubt a lack of funding is a contributing factor to the rapidly increasing student loan debt bubble according to the numbers you site.
I fail to see how this lack of funding is in any way responsible for dramatically rising tuition rates, however. This, in my opinion and based on Carpe Diem posts and data, is more likely a result of increased demand and loose lending policies. Time will tell. Regardless of cause, both trends are unsustainable.
I believe higher education is entering a new era where prospective students must begin weighing cost versus reward. Not necessarily a bad thing considering that there are a large number of degrees that, quite frankly, provide little in the way of job security or higher income for that matter.
LA
The lack of funding means the states have to increase tuition costs and shift the payment onto private shoulders.
As a community college math professor, I have been following the rise of our tution rates for the last 20 years with dismay.
In general around the country, it used to be about 60% direct state and local funding, 25% direct federal funding, and 15% funding from students.
Now, many community colleges have increased funding from students to as much as 65% of total costs!
I can assure you that community colleges are not generally profligate spenders. The vast majority of what we do is teach in ways that are NOT budget-busting boondoggles. $400 toilet seats? Not at community collegs.
Both of these blogs are among my first read every morning. Your hypotheses both today and yesterday only serve to prove why I read Carpe Diem before Bondad. And since you chose at the outset to make this a left-right issue, it was obvious that you chose the typical left-wing tripe to use partial context as your defense. First of all, you failed to even mention that the column was really an excerpt from a much larger column by Robert Samuelson. And, you even slimmed the excerpt cited down to your own convenient snippet, and left out the key issues mentioned in the whole context. The original issue being made is that the entire education system, and its entry requirements, are being dumbed down. And, the requirements are being lessened so more students will enter the 'education mill'. Higher education has therefore become a game not of expanding education, but one of increasing it to a retail business. The Carpe Diem conclusion drawn from the Samuelson column is NOT that the increase in tuition is the REASON stated for being opposed to 'education for all', but that the dumbing process that has led to an 'education for all' philosophy has RESULTED in higher tuition. Why has tuition gone up? Quite simply because the demand increased by lowering the entry standard. And your notion that the reduction of state education subsidies has led to the higher tuition rates flies in the face of all economic theory. Are you saying that shifting the burden for the cost of a product more to the consumer would lead to a higher cost of that product? Are you kidding? Cost shifting to the consumer, would lead more consumers to SHUN that product. Lower demand does not lead to higher prices. I suppose you say that the reduction of subsidies is replaced by increased student loans, which really is not shifting the cost to the 'consumer', or reducing demand. Well, that's an absurd notion as well, unless of course we follow up the higher borrowing with the idea that we solve the 'high college debt level' by forgiving the loans. Maybe you need to stick to your market analysis, which is why I read your blog, and skip the economic theory.
Dear anonymous
You're more than welcome to come back. But perhaps you'd feel more comfortable at Free Republic; they're remarkably data free in their analysis.
"Why has tuition gone up? Quite simply because the demand increased by lowering the entry standard."
Is anything that simple? I doubt it.
Price of gas is heading downward. I guess less people are buying gas, but the lower price will mean more demand so prices should stay the same. Quite simply.
I think Anonymous has some valid points but their conclusion on the OP's topic isn't one of them.
There is a common thread with recent bubbles. Namely housing, student loan / tuition, and (gasp) health care costs. That thread is government intervention, government funding, and the Eutopia of equivalency for all.
Housing was easy money, loose lending standards, and a home for all. Equivalent scenario for college education. We are entering the health care phase now with soaring costs, Medicare/Medicaid budgeting, and now ObamaRomneycare. Manufactured bubbles, whether intentional or not, really do seem to be that simple.
@L.A.
I think your conclusions are way off base.
The housing market bubble was caused by the dismantling the financial regulatory framework combined with and administration who didn't enforce existing regulations still on the books.
The "tuition bubble" as you call it isn't really a bubble it's a transfer of costs from public to private. State schools used to be largely funded by state & local governments as those governments have cut back those existing costs had to come from the students. So, the reason for the "bubble" is that government isn't involved as much as it should be involved.
Now on to your "healthcare bubble" rising costs are mainly due to no national framework for healthcare like all other industrialized nations have in place. Costs were skyrocketing log before the Affordable Care Act and will be reigned in by the ACA. So, again it's government's inaction that is causing the spike in prices.
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