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Don't Pass the Buck

December 2, 2008 - 12:15pm

With Thanksgiving behind us, it is officially the start of the gift-giving season. Unfortunately, students at public colleges and universities across the country can already expect an unwanted present from their governors -- tuition and fee increases. At least coal could have been used for heat.

Students are going to face increased tuition burdens, both for next semester and the following academic year, because governors and state legislators often turn to higher education when they need to make budget cuts. But increasing tuition could lead more students to drop out or delay enrollment -- lowering graduation rates and stranding students with debt. To prevent these negative outcomes, we urge states to make a sustained commitment to higher education, while asking schools to reexamine their financial aid and revenue allocation policies.

The coming months are going to be gloomy for higher education funding. Several states have already announced plans for postsecondary education cuts, and many more are sure to follow suit. The governors of New York and California -- the two states with the largest public higher education systems in the country -- recently proposed a new round of budget cuts on top of ones that these colleges endured earlier this year.

In New York, Democratic Gov. David Patterson is proposing a cumulative $353 million higher education cut -- $115 million this year, $238 million the following year. Colleges would make up this drop in funding by raising tuition $600 over the next year -- including a $300 hike this spring. That's a 10 percent increase at the State University of New York, Binghamton, and a 14 percent increase at the City College of the City University of New York -- the flagship schools in New York's public university and community college systems. Community colleges, meanwhile, would see an estimated 10 percent reduction in aid per student.

California, meanwhile, is calling for $464 million in higher education cuts -- including $332.2 million from community colleges and $66.3 million at the California State University System. These cuts could increase tuition by as much as 10 percent, some faculty members warn. It could cause the Cal State system, which enrolls a large number of low-income students, to drop enrollment by 10,000.

California and New York's willingness to pass college costs on to the least affluent students and schools could lead price-sensitive low-income students to drop out, reduce their attendance to part-time status, delay enrolling, or forgo college altogether. This would lead to a series of negative outcomes for students, such as not attending college at all or leaving school heavily indebted without gaining a credential, increasing the likelihood that they will eventually default on their student loans and ruin their credit.

Rather than turning to tuition as a revenue source, we implore governors and legislators to remember they are not the only ones making sacrifices to invest in higher education. The federal government spends tens of billions of dollars each year on student aid and federal loan guarantees, while students take on substantial debt and pay thousands of dollars in their own money to attend a postsecondary institution. Shifting more of the burden to federal taxpayers and students is both inequitable and unfair.

If states are unwilling to keep this commitment to higher education on their own, then the federal government should assist them with both carrots and sticks. There is already a legislative provision that would make states ineligible for certain grants if they do not maintain their higher education spending at or above their five-year average. But this program, College Access Challenge Grants, only has guaranteed funding for a few years. At Higher Ed Watch, we believe that the federal government should hold more funds at risk -- such as administrative payments to state boards of education or requested U.S. Treasury bail out funds to states and local governments (as suggested by former Higher Ed Watch Editor Michael Dannenberg) -- for states that slash higher education funding. At the same time, those that keep their funding level or increase it should either receive access to a special funding stream for low-income students or priority in competitive pilot programs.

But states aren't the only higher education actors whose practices should be scrutinized. It is also worth looking at schools' aid packages. Every single public college contacted for a recent survey by the National Association for College Admission Counseling said it provided non-need based assistance, or "merit aid." The same survey found that merit aid made up 41.9 percent of public institutional funds, only slightly less than the 46.6 percent devoted to need-based institutional aid. This is troubling because "merit aid" is not targeted at low-income students, and is instead used to compete for the best (and sometimes the wealthiest) students to boost prestige and fundraising. Schools should not be allowed to continue to spend their limited financial aid budgets on non-needy students when low- and moderate-income students are being asked to shoulder ever-larger tuition burdens.

Finally, colleges should see if they can lessen tuition increases by finding savings in their current spending practices. In an insightful Washington Monthly article about using technology to reduce college costs, Kevin Carey of Education Sector cites data from the Delta Project on Postsecondary Education Costs that show schools are spending less on instructional costs -- often their biggest expense -- while taking in more tuition revenue. This would suggest that a growing portion of their revenue is going to non-essential functions. Carey also discusses several tactics taken by Virginia Tech University to use technology to substantially reduce the cost of some expensive introductory courses without harming student achievement. Employing these type of programs on a larger scale could also help reduce the need to heap more tuition on students.

It is undeniable that the future outlook for state budgets is far from rosy. But states and schools should not take the knee-jerk, easy way out of passing more costs on to students by raising tuition. Instead, they should view the lean times ahead as an opportunity to reexamine their own spending and aid policies to increase efficiency and better target their own aid to low-income students. Doing so would recognize and match the sizable commitment the federal government, students, and parents already commit to higher education, rather than just passing the buck.