Decline in public support keeps driving tuition inflation

Posted: February 3, 2015 at 4:02 pm, Last Updated: February 3, 2015 at 4:04 pm

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With Kirk Heffelmire

As we have written here before, one of the major drivers of rising tuition prices in state universities has been the decline in state support. A recent report from the U.S. Government Accountability Office highlights the pervasiveness of this decline and the financial burden it puts upon students and their families.

Some additional analysis using data from The College Board and the Grapevine report only reinforces this relationship between public support and tuition levels. Between the start of the recession and now, all states have increased tuition and the majority have decreased their support for higher education on a per full-time equivalent (FTE) student basis. The chart above illustrates how states making deeper cuts in public support also had, on average, higher tuition increases.

The linear relationship between state support and tuition rates is significant and implies that for every percentage-point cut in state support, tuition increased by 0.4 percentage points. (The substantial increase in state support for Illinois is due to the very large contribution made to their university employee retirement system. North Dakota has seen an influx of oil and gas related revenues to support their increase in support for higher education.)

The decline in state support has a significant relationship with tuition prices. Students and their families must now take on a greater burden to finance the increasingly vital college degree. The recession and sluggish recovery has put great pressure on state budgets. However, reducing funding for higher education has made college less affordable, which may further entrench inequality, pass on a heavy load to future generations, and put future economic growth on less sure footing.

Write to Ángel Cabrera at president@gmu.edu

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