- During the past two decades, federal support for higher education rose while state support dropped, explains a report released Tuesday from The Pew Charitable Trusts.
- Although states have historically accounted for the bulk of spending on higher ed, their per-student funding fell 31% from 2000 and 2015. As a result, the gap between state and federal higher ed spending narrowed from 100% to 12% during the period.
- Federal and state policy decisions will determine whether the "funding convergence" will be a "temporary or more lasting reconfiguration," the authors note.
The convergence of funding matters because it changes how support for higher ed flows into the system, Rebecca Thiess, associate manager at The Pew Charitable Trusts, told reporters during a call last week.
"We're seeing more support directly to students via the federal government and less general funding for public institutions via the state," she added.
Indeed, the federal government has expanded its aid programs over the last decade. Pell Grant spending, for example, climbed 71% from 2007 to 2017, leading to an additional $11.5 billion for the program.
A weak economy drove part of that growth, Thiess explained. During the recession, "many people who lost jobs or had a hard time finding work chose to go back to school and build skills," she said.
Meanwhile, states still haven't returned to pre-recession levels of support for higher ed. As of 2017, general-purpose appropriations from the states were lower by an inflation-adjusted $2.2 billion compared to a decade ago, the report notes.
In all, federal spending on major higher ed programs reached $74.8 billion in 2017 — though that figure excludes student loans and tax deductions — while states spent $87.1 billion.
Public colleges and universities rely on federal and state revenue for about one-third of their budgets.
But that support varies by state. For example, Alaska's public institutions received roughly $20,300 in per-student funding from the state in 2017, while Colorado's colleges only received about $2,800.
A decline in state support can cause massive disruptions for the colleges that rely on it most. Earlier this year, the state of Alaska sent its public university system into chaos after the governor announced $135 million in cuts to higher ed — an unprecedented amount that he since lowered to $70 million over three years.
Funding for higher ed is cyclical, Thiess said, with an economic downturn causing the federal government to ramp up its support while the states typically cut back theirs. "But future funding levels are really dependent on policy choices," she said.
Some 20 colleges, for instance, offer some form of free college. And Democratic candidates for president have proposed nationwide free tuition programs, massive student loan forgiveness, expanded Pell Grants and more funding for minority-serving institutions.
"I hope that this research does help inform those policy choices when the next recession comes so that both federal and state policymakers kind of know where their funding stands as they face challenges," Thiess said.