Decades of State Cuts to Higher Ed Threaten Millenials

New York— America’s future middle class is in peril, with state investment in public higher education plummeting over the past two decades leaving students and their families to pick up the slack.  A just released report by public policy center Demos provides a new analysis of the Grapevine data on state funding trends for public higher education from 1990 onwards and details how a pattern of disinvestment is leading to stagnant graduation rates and skyrocketing levels of student debt.

“The Great Cost Shift: How Higher Education Cuts Undermine The Future Middle Class,” authored by John Quinterno, shows how deep cuts since the Great Recession only represent a snapshot of long-term disinvestment: From 1990 to 2010 states’ funding per full-time equivalent student dropped 26.1 percent. By investing less in higher education, states are effectively shifting costs to students and their families in the form of escalating tuition and fees.

“The Great Cost Shift” uniquely puts state funding for higher education trends in a larger context, underscoring the consequences for Millenials, one of the largest and most racially and economically diverse college-age populations.   As the report details, the combination of stagnant incomes for most American households, a shift in state financial aid away from need-based funding, and growing tuition rates has contributed to today’s “debt-for-diploma” system that puts education and economic security out of reach for far too many.

“When we turn our back on higher education, we turn our back on the future of the middle class in America,” said Viany Orozco, Senior Policy Analyst at Demos. “State and federal legislators need to recognize that our future workforce will demand a higher education degree; a college degree is not a privilege, it is a necessity.”

The report calls for renewing America’s commitment to nurturing a strong and inclusive middle class through investments in public higher education. It underscores that we have the capacity to invest more, for despite the budget challenges of recent years, every state is wealthier than it was twenty years ago. 

Key findings in the report include: 

• In 1990, 71.7 percent of young adults were White; 13.5 percent were African American; and 11.6 percent were of Hispanic origin. By 2010, persons of Hispanic ethnicity accounted for 20.1 percent of the young adult population, African American persons 12.3 percent, and White persons 57.2 percent.

• Public institutions have played an important role in serving the growing numbers of undergraduate students. Public institutions absorbed 65.6 percent of the undergraduate enrollment increases that have occurred since 1990.

• After controlling for inflation, states collectively invested in higher education $6.12 per $1,000 in personal income in 2010-2011, down from $8.75 in 1990-1991, despite the fact that personal income increased by 66.2 percent over that period.

• Over the past 20 years there has been a breakdown in the historical funding pattern of recessionary cuts and expansionary rebounds. The length of time for higher education funding to recover following recessions has lengthened for every downturn since 1979 with early evidence suggesting that the recovery from the Great Recession will be no different.

• Between 1990-1991 and 2009-2010, published prices for tuition and fees at public four-year universities more than doubled, rising by 112.5 percent, after adjusting for inflation, while the real price of two-year colleges climbed by 71 percent.

• Median household income in the United States in 2010 was just 2.1 percent higher than in 1990.

To bridge the gap between cost and financial aid, increasingly students are borrowing from 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 speak with Viany Orozco or John Quinterno please see the contact information above.