Why College Costs Increase
by Daniel Luzer
State funding for public colleges continues to decline.
Some people have been worried about the high cost of college and increasingly debt for more than 25 years, but the states don’t appear to be doing much to fix this problem.
According to a recent report issued by the State Higher Education Executive Officers:
Constant (adjusted for the impact of inflation over time) dollar per student state and local funding for public colleges and universities continued to decrease between 2010 and 2011. State and local support (excluding appropriations for research, agricultural extension, and medical education) per full -time-equivalent student was $6,532 in 2010, a $500 constant dollar (or 7 percent) decrease from 2009, and the lowest in the last 25 years. This trend continued in 2011 with state and local support per FTE at $6,290, an additional 3.7 percent decrease. This decrease in per student support, despite relatively stable state support, was driven by an increase in enrollment of more than 8 percent in the two years between 2009 and 2011.
The report makes clear that state and local funding for higher education institutions has actually increased substantially in the last 25 years. In 1986, for instance, state and local governments supplied $31.4 billion to support higher education institutions. State and local support in 2011 was $87.5 billion.
But then enrollment in public institutions has increased dramatically during the same period. In 1986 7.2 million students attended public colleges. Today public colleges educate 11.8 million students. In the last five years alone, in fact, enrollment in public colleges and universities increased 17 percent. During the same period, state support stayed essentially the same.
But if the state provides the same, or slightly increasing, money to state universities, but the number of students skyrockets, the state is effectively providing less money.
So how do institutions make up for the decline in state funding? They do it with tuition. This graph from SHEEO shows net tuition as a percent of public higher education’s total revenue, from 1986-2011:
In 1986 tuition made up less than a quarter of total revenues. Today it makes up almost 45 percent.