Higher Education: Who Benefits? Who Pays? Who Loses?

The New York Times published an article last Friday which puts the cost of not investing in higher education in perspective. The article talks about a "cumulative public divestment" in public higher education as being the primary driver of sky-rocketing tuition.

The stats quoted by the Times are scary enough:

  • State appropriations for colleges fell by 7.6 percent in 2011-12, the largest annual decline in at least five decades....

  • Since 1985, the average amount that public institutions spend on teaching each full-time student over the course of a year has barely budged, hovering around an inflation-adjusted $10,000....

  • But in the same period, the share of instruction costs paid for by actual tuition — not the sticker price, but the amount students actually pay after financial aid — has nearly doubled, to 40 percent from 23 percent.

The reality of who benefits from higher education is actually the opposite of who is paying for it, according to the article. While, "there has been a shift from the belief that we as a nation benefit from higher education, to a belief that it’s the people receiving the education who primarily benefit and so they should foot the bill...”

Economists have found that higher education benefits communities even more than it benefits the individual receiving the degree. Studies show that an educated populace leads to faster economic growth and a more stable democracy, and benefits the poorest workers the most....

A key point not mentioned in the article is that under the status quo the negative outcomes of state divestment for individuals and society are only going to get worse. First, states are reducing funding of higher education just as only the oldest Millenials, one of the largest generations, have been turning college age.

According to the National Center for Education Statistics, from 1995 to 2009, enrollments in postsecondary institutions increased 43 percent. As younger Millenials turn college age over the next two decades and as an increasing numbers of older individuals return to school for further education or retraining, the growing demand for postsecondary education is not going to abate, putting greater pressure on our system of public higher education, which has been absorbing the bulk of new enrollments.

NCES projections of college enrollments, which don’t account for factors such as increasing costs, highlight a second key point. Mainly that the biggest gains in potential college enrollments will be among minority groups, which tend to have less financial resources. Between 2009 and 2020, postsecondary enrollments are projected to increase by 1 percent for students who are White, 25 percent for students who are Black and 46 percent for students who are Hispanic. A key factor behind these projections is that the young adult population is much more racially and ethnically diverse.

Yet given the lower financial resources of Black and Hispanic young adults, rising costs will likely price out a large number of them, or leave them with access only to the lowest cost institutions, threatening our long standing commitment to equal access to higher education and our ability to train the workers that our local and national economy needs.