Why Have In-State Universities Become So Expensive?
As the new administration looks to another large stimulus package including plans to make college more affordable and forgive some student loan debt, it’s worth looking at how and why the costs at public universities have increased so dramatically in the last three decades.
According to the National Center for Education Statistics, the cost of attendance (tuition, room and board, and fees) for all public institutions rose 104 percent from 1990 to the organization’s most current similar statistic in 2018.
These surges can be explained by a variety of reasons – an increase in demand for a college education (increasingly 4-year institutions) with many more people wanting to attend college. In that type of competitive market, colleges can raise prices. Other factors are a lack of funding from states, an increase in available financial aid, increased student services, and an increased need for faculty, staff, IT support, and equipment.
Probably most significant is that states have shifted the burden of paying for college to families. Historically, states provided a far greater share of assistance to postsecondary institutions and students than the federal government did; in 1990 state per-student funding was about 140 percent more than that from the federal government. Over the past two decades and particularly since the 2008 recession, state investments declined. State funding per student in 2015 was only 12 percent above federal levels. So the shift was well underway before the coronavirus pandemic ripped at higher education budgets this past year.
Although each state is unique in its own system for public, private, and for-profit institutions and generalizations are difficult, few states have recovered from that loss of state funding to higher education.
In general, colleges rely on tuition or admitting more students – increasingly more from other states and other countries – to make up for shortfalls in state funding. To attract more students from in-state and lure students from out-of-state, colleges make improvements to academic programs and recreational facilities. The enhancements push up the price tag.
“According to the National Center for Education Statistics, the cost of attendance (tuition, room and board, and fees) for all public institutions rose 104 percent from 1990 to the organization’s most current similar statistic in 2018.”
Falling back on tuition and fee hikes to carry colleges through a recession might not apply this time with the country possibly facing a coronavirus-caused economic downturn. And states will most likely look to prioritize helping people suddenly unemployed rather than funding suffering colleges.
“Public funding for higher education has never been so low going into a recession," said Sophia Laderman, policy analyst and author of the fiscal 2019 State Higher Education Finance report. "If [colleges’] funding is cut on both sides, and there are costs related to technology and going online and all those kinds of things, it’s really tough to say what will happen. It’s pretty much a given that state funding will decline, so the enrollment and tuition revenue questions are all that’s unknown at this point."
Can the pandemic and efforts in response to it lead to policy addressing spiraling college costs? In the past, increases in federal financial aid have meant increases in college tuition. With the introduction of direct federal loans in the 1990s (subsidized and later unsubsidized), public universities raised their tuitions. Those new loan options upped the ability of families to pay, so universities increased their prices.
Before the pandemic hit, the cost of attending college was at an all-time high, and the pandemic has only worsened affordability. Average tuition and fees plus room and board for four-year, in-state public colleges in the school year 2020-21 was $22,180, according to the College Board, a prohibitive price tag for what should be affordable for all. The increase in the cost of college has outpaced inflation and family income over the past two decades. President Biden’s proponents say his administration’s tuition-free plans for households making less than $125,000 – with 75 percent of public in-state tuition for qualifying families paid for by the federal government and the state agreeing to pay the rest – would grow the economy. It would increase the number of students who enter and complete (public) college, according to an analysis by the Campaign for Free College Tuition and Rise, an advocacy organization focused on college affordability. The analysis also shows this would most likely lead to an overall decline in private college enrollment.
Not all experts agree that free college is the best way to combat the higher education affordability crisis. Critics say Biden’s plan permits the federal government too large of a role in higher education policy. Also, the money will not cover fees, books or room and board, all costs that lower-income students struggle with, and diverting funds toward free tuition could compromise campus operations like hiring.
Biden’s free college campaign proposal didn’t make it into the stimulus plan he outlined in January, which centered around more pressing concerns like vaccination distribution and re-opening K-12 schools, or the recent infrastructure bill which did address community colleges, historically Black colleges, and research funding. He plans to lay out debt forgiveness and free college proposals to Congress in the coming months.