The decreasing amounts in state budgets for higher education that have flooded the news lately are really part of a larger trend. A summation of studies shows that between 1978 and 2011, the percentage of state funds for higher education shrunk by 40% while tuition rose by nearly the same percentage in just the last decade. Federal funds have also decreased, and students, along with their families, are left paying the tab. On average, two-thirds of college students graduate with nearly $25,000 in debt. Most Americans are justifiably outraged as higher education seems to be nearly out of reach for the middle class. 
Clearly something needs to be done; yet, can the solution be to continue doing what has been increasingly failing since the disco era? Do taxpayers really want to continue putting money into a failing business venture? Given that online education enrollment is rising exponentially faster than traditional, brick and mortar enrollments, with the likelihood that some students are living outside of the home state of the institution, should residents be subsidizing the educational expenses of non-residents? Is it a form of taxation without representation to make 100% of a state’s adult inhabitants’ pay into a university system for non-residents—perhaps even for students who are not American citizens? Do state and federal contributions help cause tuition inflation?
There are more questions than answers, but they do seem to point in a direction that needs brave exploration: Is state funding an outdated approach for higher education?
Fail, Fail, Fail
A recent report by the National Conference of State Legislatures(NCSL) on state funding for higher education in fiscal years 2009 and 2010 explains quite succinctly the main reasons why state funding of higher education fails. To most legislators, spending on colleges and universities is considered discretionary, meaning money isn’t earmarked specifically for education. “The rationale is simple: Colleges and universities can find other sources of income, such as tuition, to compensate for reduced state support. This is not an option available to other state services. As a result, fluctuations in state fiscal conditions often have a greater impact on higher education” (NCSL, 2010, p.1). The report goes on to say that the third major funding source for higher education institutions is their endowments; however, with the recent global recession, these, too, have been hit hard. This, in combination with a per student cost that has remained effectively in the $7,000/student/year range for the last decade, the only stable source of income for universities is tuition (NCSL, 2010, p.1). [For those interested in more detailed statistics, this report does breakdown state funding appropriations along with some regional issues on a state-by-state basis.]
Clearly, making higher education’s financial stability based to a large extent on discretionary funding is a bit like individuals hoping to make their next house payment in part from odd jobs rather than one with a regular paycheck. This is especially frightening in a time of economic downturn. However, there are other reasons some see state funding as problematic; some believe it actually exacerbates education costs.
The Mad King
Once upon a time in the U.S., our forefathers revolted against King George III over taxation without representation. A similar situation is brewing with higher education funding today. Like the mad king, the federal government stepped in. The American Recovery and Reinvestment Act (ARRA) was passed in February 2009, and it basically provides extra funding that states may use for higher education support; it also contains an edict that states maintain funding for colleges and universities at the 2006 level (NCSL, 2010, p.2). Additional federal financial aid, largely in the form of Pell grants, reflects a similar goal. Ultimately, it is the American taxpayer who foots the bill for this federal support. However, when an increasing number of citizens cannot afford to send themselves or their children to college, and when taxpayers have no say in how their money is spent, the revolt against education related taxation without representation begins.
Another concern is concisely expressed by Julie Borowski (2010); based largely upon a landmark Cato Institute study, “Making Colleges More Expensive: The Unintended Consequences of Federal Aid,” she outlines how this increase in federal assistance has actually led to higher tuition. It’s almost like bailing water from the lake into a slowly sinking rowboat because these forms of federal financial aid increase the demand for education. When demand goes up, so does the competition and the price.
Enter the French
Just as the French (who were revving up their own revolution) provided aid to the American colonists in their revolution, a host of helpers for higher education have arisen in the last decade. Consider, for example, the < a href=http://bit.ly/ig5tpz>explosion in non-traditional student enrollment (average age 34 with over 80% working adults with families) in online courses which has gone up 21% (vs. 1.8% for traditional, ground campus programs). This is followed by the currently trending increase in military student enrollment largely because of the G.I. Bill and the rise of the so-called “for-profit,” mostly online universities who serve both demographics.
Although all of this has the potential to offer educational opportunities to more people, especially through virtual learning where courses can be completed from anywhere, a new concern emerges. As schools that are in part funded by states increase their online course offerings, they are obtaining more out-of-state students. Some of the costs for these non-resident students may come from higher out-of-state tuition, but it typically isn’t enough to cover all the expense related to these students’ education. Residents are asking the obvious question: Why should they pay to assist non-residents in attending college, especially if these students are not even American citizens? Again, this is exacerbated by the difficult economic time.
Declaration of Independence
Eventually, sink or swim, our forbearers declared their independence from England and did not succumb to the temptation to bow down to any other foreign power like the French. They admirably charted their own course. Therefore, although there are some other solutions, like colleges increasing efficiency, it’s time to hold this truth as self-evident – that each individual who wishes to attend college must pursue that happiness independently. State and federal governments are not a stable source of income for higher education, and taxpayers are entitled to benefit from having their money well spent or better yet, not taken from them at all. If resident and non-resident students assume the burden of their own educational expenses, they may fall into the average $25,000 debt for a bachelor degree; however, they are equally likely to fall into the additional near $1 million dollar salary increase over a lifetime that they would not have had if they had not completed that degree. Who of us wouldn’t invest $25K right now if we could get a million dollars back? The state and federal governments could lessen the upfront taxation as they reduce the amount of aid to higher education; thereby, hopefully reducing the expense of a college degree. This could later be recovered by higher revenues received from income tax on that extra million! It’s time to at least try a new approach as state funding seems outdated and federal assistance appears to be having the opposite effect than intended.
Perhaps when the portion of American taxpayer dollars supposedly assessed for higher education are returned to them to be applied to their own pursuit of learning, they will be able to cry out as Samuel Adams did at the beginning of the War of 1776: “What a glorious morning for America!”
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