Higher ed costs shifted to families as average income lags

State disinvestment in public higher education over the past two decades has shifted costs to students and their families at a time when incomes for most American households have stagnated, according to a new report by a national public policy research and advocacy organization.

The Great Cost Shift: How Higher Education Cuts Undermine the Future Middle Class, released by Demos, a New York-based non-profit, traces state funding trends from 1990 onward and finds evidence that a structural change in state support for higher education is under way. This change coincides with demographic shifts that are producing larger and more economically, racially and ethnically diverse student bodies. This report is a welcome opportunity to view in a national context challenges that the Bell Policy Center has long strived to help Colorado address.

According to the report, after controlling for inflation, states collectively invested $6.12 per $1,000 in personal income in 2010-2011, down from $8.75 in 1990-91. In Colorado, funding per $1,000 in personal income plummeted from $8.36 in 1990-91 to $3.17 in 2010-2011.

As state support has dropped, institutions have responded by charging students more. Between 1990-91 and 2009-10, published prices for tuition and fees at public four-year universities more than doubled, increasing by 112.5 percent, after adjusting for inflation.

This persistent rise in college costs has taken place alongside flat income growth for most American households, the report notes. Median household income in the United States in 2010 was only 2.1 percent higher than in 1990. Rising costs, combined with stagnant incomes, have led many students, especially low- and moderate-income ones, to rely heavily on federal loan programs and private sources like banks. The volume of outstanding student loan debt has grown by a factor of 4.5 since 1999. To avoid or limit their debt burdens, many students choose to work long hours and enroll on a part-time basis – factors that are associated with the likelihood that a student will fail to earn a degree or credential. Rising costs may drive other potential students to forgo higher education entirely.

The report notes that access to higher education should be an issue of concern not just to individuals but to society as a whole. Sixty-three percent of the jobs that the country will add by 2018 will require workers with some kind of post-secondary education credential; states that fail to produce enough qualified graduates will likely find themselves at a competitive disadvantage.

At the top of the policy recommendations that conclude the report is the suggestion that state leaders invest more of their resources in higher education, especially since the growth in student enrollments will not slow anytime soon. Additionally, state leaders are urged to reform their tax systems to ensure that there is sufficient revenue to address the structural imbalance in higher education funding. That way, higher education will not continue to be edged out of state budgets.

– Alec Arellano