Declining Investment in Higher Education Hurts Students

Many students turn to loans to finance their education.

Last week, Rep. Virginia Foxx expressed her lack of tolerance for people with student loans. Having worked her way through school without borrowing a dime, Foxx believes there is no reason students should have large amounts of student debt.

The Student Loan Ranger knows not everyone understands why most students today must borrow, so we'd like to share some information that may help.

We want to begin by saying that many students are attuned to the effects of student debt, and often their unwillingness to borrow can be detrimental to success. Students are also dealing with the constantly imperiled Pell Grant program and a dynamic shift in financial aid policies that prices lower- and middle-income students out of higher education.

In the past three decades, college costs have risen significantly faster than inflation and are now at roughly 25 percent of the average household's income. This isn't true just for private schools. According to "The Great Cost Shift," a recent report by Demos, prices for tuition and fees at public, four-year universities more than doubled between 1990-1991 and 2009-2010, rising by 112.5 percent, while prices of two-year colleges rose 71 percent.

[Estimate your net price of college.]

So what's causing tuition to rise at such a rapid pace? A major factor in tuition increases at public institutions has been the withdrawal of state and local funding.

According to "The Great Cost Shift," states' disinvestment in public institutions over the past two decades has resulted in "an irreversible slide of U.S. higher education being a collectively-funded public good to that of an individually purchased private good."

The report, which examines the impact of states' reduction and restructuring of financial support, is chock-full of statistics. Below is some of the more striking information:

• From 1990-1991 to 2010-2011, total state appropriations rose from $65.1 billion to $75.6 billion. But state funding actually declined in relative terms. 

• If states had provided the same level of per capita support as in 1990-1991, they would have invested $80.7 billion in 2010-2011.

• If states had provided the same level of funding per public, full-time equivalent student as in 1990-1991, total appropriations in 2009-2010 would have equaled approximately $102 billion, an amount 35.3 percent higher.

• The proportion of their revenues that public colleges and universities received from state appropriations dropped from 38.3 percent in 1991-1992 to 24.4 percent in 2008-2009. Rising tuition, fees, and room and board represent a shift in support from the state as a whole to individual students and their families.

In addition, the financial aid system has failed to keep pace with escalating costs, forcing students and their families to rely on financing strategies that reduce their odds of completing school.

[Find out how to finish community college.]

• States reoriented their financial aid programs away from need-based assistance to merit-based aid, which favors wealthier students. Students not only pay more than they used to but also borrow more extensively.

As the report explains:

"The tuition solution is an imperfect one. Because state appropriations generally contribute a much larger share of public university revenue than tuition, any specific percentage reduction in state aid requires much larger percentage rises in tuition. Such increases price low- and moderate-income students out of higher education (while also eroding state support for higher education).

"Educational quality may erode, and some students forego higher education entirely."

So as you can see, it's not so easy for students to obtain a higher education without borrowing, and many factors are contributing to the dilemma. The Student Loan Ranger believes we all must recognize that students who are seeking this education are doing so at a much higher cost than in the past and are forced to find ways to pay.

To learn more about existing student debt relief programs like income-driven repayment plans and Public Service Loan Forgiveness, register for one of our upcoming student debt relief webinars. And follow us on Twitter (use #studentdebthelp) and Facebook to stay informed.

Radhika Singh Miller is a program manager for Educational Debt Relief and Outreach at Equal Justice Works. In 2008, she served on the Student Loans Team in the Negotiated Rulemaking for the College Cost Reduction and Access Act (CCRAA) and has extensive knowledge of this landmark educational debt relief legislation. Radhika graduated from Loyola Law School Los Angeles. Prior to joining Equal Justice Works, she was a staff attorney at the Partnership for Civil Justice, focusing on constitutional and civil rights litigation and advocacy.

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