The State Funding Problem

Given the many policymakers and pundits now wringing their hands about the education rate in the United States, is the country under investing in higher education?

An article in NEA Today says yes. But it’s actually sort of unclear to what degree greater public investment in higher education would fix the problem and improve educational achievement and college costs.

As Mary Ellen Flannery writes at NEA Today:

When state and federal lawmakers invest in public higher education, it pays off— not just for those college degree-earning students, who will earn much more money over their lifetimes, but also for their country, which will enjoy billions of dollars in additional revenues, concludes a recent report.

Unfortunately, the United States hasn’t made that investment, especially not in recent years as state budgets for public higher education are slashed and federal college affordability programs attacked, and now we are falling dangerously behind our global competitors.

This, while true, is misleading. Giving the universities more money, alone, won’t make higher education cheaper for students. What would really make college cheaper, and perhaps therefore improve completion rates, would be controlling the amount the universities can charge in tuition.

This is the real problem in public universities (which about 80 percent of American college students attend); they use tuition to compensate for declining state revenues. This is understandable, but it hurts students and doesn’t spur improvement in the institutions

Florida and New York have such rules. Florida state colleges have an annual tuition increase cap of 15 percent. The State University of New York can’t increase tuition at all without legislative approval.

This keeps the cost to students low. Florida ranks 45th in the nation in terms of college costs (meaning that only six states are cheaper); New York is about 38th.

The universities sure complain about the rules on increasing tuition, especially when the states cut funding, but they’ve been complaining for years. There’s no evidence state colleges in such places are any worse than in places with no such rules. But the only thing that’s different is that students have to pay more.

It’s true that it doesn’t make sense to cut funding for education at a time when we need more people to complete college. But more funding isn’t the only solution here, because it doesn’t do much to change behavior or actually keep college affordable.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer