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By Annie Wood
November 4, 2014
Caption : States' disinvestment in public higher education is hurting the students these institutions traditionally meant to serve.     

It seems pretty common-sense that some public investments, like those made in public higher education, really pay off economically. While public colleges and universities give many American students the chance for economic growth and increased opportunities, the price tag on these colleges has significantly risen in recent years.

The Great Recession hit both schools and families hard. States doled out less funding in rough economic times, so tuition rose proportionally. Students’ families strapped by the recession had to take on more loans. The increased cost of public higher education hit low- and middle-income families the hardest.

A new report by David Bergeron, Elizabeth Baylor, and Antoinette Flowers at the Center for American Progress (CAP) titled “A Great Recession, A Great Retreat” examines the adverse effects of states divesting in public higher education and calls for action.

A little bit of higher education funding history: In 1947, the Truman Commission on Higher Education saw the incredible value and potential return on having an educated workforce. The Commission aimed to invest in public higher education, and make it accessible to all students. From the 1950’s to the 1970’s the Commission made recommendations and investments, which had a very clear positive impact—there was significant growth in the number of high school graduates going on to further their education.

State and federal governments have shared the responsibility of funding public higher education. For years, both states and the federal government made huge strides in keeping college affordable. The federal government made a $17 billion investment in the Pell Grant program, to make more grants available and to increase the number of students who are eligible. A $2,500 tax credit for families making up to $180,000 has also been made available to parents helping pay for their student’s college education.

However, Pell Grants cover far less tuition today than in decades past. Additionally, while the federal government has been working to increase investments, states hit hard by the Great Recession have reeled in their spending on public higher education. This is problematic, because when states have traditionally been the largest source of funding for these schools—public colleges and universities count on state investment not only to keep their doors open, but to keep costs low for students.

The new CAP report finds that between 2008 and 2012, students taking out loans to pay for their education increased from 35 to 40 percent, and borrowing increased on average from $6,200 to $7,800. There has also been a decline in middle-income and low-income students enrolling in public colleges and universities.

This report builds on previous findings, and includes a state-by-state analysis. The findings look at the relationship between the reduction of state funding and increased dependence on tuition revenue, how middle- and low-income families in states with the highest disinvestment pay a much higher net price compared to their counterparts in other states, and how the cuts to public higher education funding disproportionately negatively impact 2-year community colleges.

CAP is not alone in examining how state disinvestment in higher education directly leads to tuition increases and harms students. There unfortunately is not a simple solution that will magically make states increase their investments in colleges and universities and students. However, the CAP Higher Education team urges the federal government to make an investment and commitment similar to that of the Truman Commission, since the country stands to benefit from a more educated workforce. Some suggestions include allocating funding to states where support is lacking for low-income and military students.

There may be many ways to approach increasing state funding to higher education, but the findings of this report are clear: States need to reassess their spending priorities because right now, the cost of public colleges and universities—traditionally meant to be inclusive and accessible—has spiraled out of control.

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