By Ben Harris, chief editor of the Biden Forum

Mar 14, 2018

After nearly a decade of recovery, most aspects of our economy have rebounded from the recession.

Employment. The stock market. Housing prices. But one aspect of our economy has yet to bounce back: state funding for college education.

In the depths of the recession, states slashed college funding to balance their budgets. But as the economy picked up, and state tax revenues rebounded, states kept cutting. Ten years later, according to the Center on Budget and Policy Priorities, 44 states are still spending less today than they did in 2008.

For many states, the ten-year cuts have been drastic. Arizona has cut its higher ed spending by 54 percent; Louisiana slashed its college funding by 45 percent. Illinois, Pennsylvania, Alabama, Oklahoma, and South Carolina all imposed cuts of more than one-third. These cuts translate into severe consequences for students. The annual spending per student has declined by $1,000 or more in 33 states, and $3,000 or more in six states. These reductions in funding mean either lower quality educations or larger tuition bills.

By cutting off budget lifelines to state colleges, states are walking away from a long-standing social contract. It used to be that states funded the bulk of their higher education costs, with the understanding that the investment would pay dividends down the line. A degree makes today’s young adults more productive, they earn more, and then pay for the next generation of students — everyone is made better off with higher incomes.

The beauty of this arrangement — older generations funding the college educations of younger generations — is that it was the best way to ensure the continuation of a highly educated workforce. The alternative — asking young people to foot the bulk of their college bill — forces a handful of subpar outcomes. Aspiring students can either postpone their education or forego it altogether; both of which drive down productivity and wages. Students can take on debt, which can destabilize personal finances and hamstring young families for decades. Or students can turn to their families for support, which means that only the most well-off students will get a shot at college.

Part of the opposition to the social contract may be rooted in the mistaken belief that because they paid the cost of tuition, individuals “put themselves through college.” Nothing could be farther from the truth. Tuition only covers a fraction of the costs of an education, especially at public colleges — the rest comes from public funding, grants, and endowments. For example, in 2014–2015 (the most recent data available), the average per-student cost at a four-year public university was $24,140 — but tuition only made up $10,170 of that cost. The rest was paid for by state appropriations ($7,130) and federal funding ($6,840).

Students are increasingly being asked to pay for a larger share of their education. For those who received their degrees in the 1980s or earlier, tuition only made up a small part of the costs of a college education; the older generation of taxpayers paid the bulk of the bill. A public university student in the mid-1980s would only be on the hook for about one-fifth of their college costs. Today, with state budget costs, the share has roughly doubled to nearly 50 percent. To put it simply, the current generation of state legislators who so happily accepted the support of yesterday’s taxpayers are unwilling to make the same investment in students today.

The undeniable link between college education and higher income has been established time and again. Two decades ago, the U.S. was the leader in college graduation rates among developed countries; today we’re in the middle of the pack. Losing on college graduation means losing on income and productivity in the future — and this is not a race we can afford to lose.