The States' Failure To Support Higher Education

Universally accessible and affordable public higher-education systems have become an economic and social necessity for all advancing nations. Unfortunately, however, on the whole, many policy makers in this country have not demonstrated much interest in providing the requisite financial support for public colleges and universities. Many state institutions are coping with rapidly growing numbers of applicants, as well as increasing legislative demands for greater performance and productivity. Yet the gap between such expectations and the resources to meet them is creating a looming crisis.

Cutbacks and minimal increases in state appropriations to public universities have led to a draconian cycle whereby institutions have increasingly raised their tuitions to make up for the lost revenues, which, in turn, has spurred state governments to further reduce their commitment and support. An unfortunate result is that public universities are increasingly becoming less accessible to students from lower socioeconomic backgrounds. The problem is widespread and will continue unless we embark on a new national debate on the future of public higher education.

Unfortunately, our nation has not engaged in such a substantive debate for nearly four decades. In the late 1960s and early 1970s, the discussion arose from concerns about how to share the burden of providing resources for higher education and how to increase accessibility to postsecondary education for students. Out of that debate came federal policies that were justified under the rubric of protecting the diversity of the higher-education system by making public funds available to private colleges and universities before an ever-widening tuition gap between them and public institutions forced many private colleges into financial hardship or bankruptcy. Policy makers also argued that the federal government's role in higher education should remain secondary to the states' in providing affordable and accessible higher-education opportunities. In other words, federal polices should be designed to supplement state higher-education support rather than replace it.

Since then the federal government has bailed out many financially starved, private nonprofit colleges through tuition-based grants, loans, and tax-assistance programs, while also providing the fiscal impetus for a proliferation of private for-profit institutions. Current federal-government policies provide $61-billion in loans, $18-billion in direct student-aid grants, and $8-billion in tax support Ð'-- more than $90-billion in total Ð'-- to higher education, while all the states together supply about $75-billion, of which about $7-billion is for financial aid. That signifies an important milestone that was never anticipated when the Higher Education Act was first enacted four decades ago: For perhaps the first time in history, the federal government has surpassed state governments as the primary financial supporter of higher education.

Under the current system, federal student-aid policies have not only inadvertently discouraged states from maintaining or increasing tax support for higher education, they have also helped shift the costs of attending college to students and their families. Indirectly or directly, such policies have had an adverse fiscal effect on public institutions that have kept their tuition and fees comparatively low and on states that recognize that higher education is a public good and have maintained strong investments.

During the last few years, federal officials and legislators have repeatedly analyzed the premises that underlie the current federal system in anticipation of the reauthorization of the Higher Education Act. The conclusions that have been drawn have reflected concerns that some colleges, particularly high-tuition and for-profit institutions, have been able to set rising "sticker prices" that draw inflated federal, and increasingly state, student-aid subsidies. In some cases, such practices have resulted in growing numbers of students sinking into debt to pay tuition or refusing to enroll in college at all. In fact, in the name of greater access and choice for middle- and lower-income students, current federal policies can create fiscal barriers by providing incentives for institutions to raise their tuition and fees. The exception to the rule, to a lesser extent, has been Pell Grants, which are not as sensitive to variations in the cost of attendance.

States, of course, vary in their ability to maximize federal revenues through grant, loan, and tuition-tax-credit programs. However, those states that have, in fact, shifted the burden of financing higher education to students by substantially increasing tuition and fees in lieu of tax support Ð'-- like Colorado, Ohio, Pennsylvania, and Vermont Ð'-- are able to draw relatively greater direct student-aid subsidies from the federal government. In contrast, states that have struggled to keep tuition low through higher taxes and greater public support Ð'-- like California, Kentucky, New Mexico, and North Carolina Ð'-- find themselves disproportionately disadvantaged in receipt of federal dollars for student-aid grants and subsidized loans.

Given that 77 percent of all college students attend public institutions, it is surprising that we have given relatively little attention at the national level to the considerable differences in tax efforts and higher-education investments among the states. Three alternatives would seem to be appropriate for states to maintain their financial commitment to ensure affordable access to college more effectively