Affordability and State Support for Higher Education

Affordability and State Support for Higher Education

Ramona Sue McNeal (University of Northern Iowa, USA), Lisa Dotterweich Bryan (Western Iowa Tech Community College, USA), and Mary Schmeida (Kent State University, USA)
DOI: 10.4018/978-1-6684-5934-8.ch005
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Abstract

The COVID-19 pandemic has helped to accelerate an already declining rate in college enrollment in the U.S. tuition, and college fees have continued to outpace inflation, pricing some students out of higher education. State appropriations can help offset the cost of college, but state support varies significantly. While some states have been creative in promoting college affordability by adoption programs including bans on scholarship displacement and promise programs, others have reduced funding. Why has the state-level response differed so significantly? In exploring this question, this chapter examines the influence of state-level factors on state appropriations for higher education for the years 2010 through 2020. Pooled cross-sectional time series data that controls for variation between states and over time is used.
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Introduction

The COVID-19 pandemic challenged government agencies at all levels to find creative ways to deliver public service. Following a declaration of a pandemic by the World Health Organization (WHO) in March 2020, schools moved online. During the 2020-2021 academic year, higher education in the U.S. used a combination of in-person, online, and hybrid methods to provide instruction. In the following academic year, schools returned to in-person delivery (College Board, 2021). Returning to in-person classes has not meant that colleges resumed where they left off in March 2020. Higher education returned to a series of challenges; among the issues they face in 2022-2023 school year are affordability, campus safety, and free speech.

State legislatures submitted numerous bills during the 2022 legislative session that impact how colleges and universities will be able to operate in the 2022-2023 school year. Campus safety has become a priority in many state legislatures. Ten states legislatures reviewed bills on sexual assault on campus while six considered making hazing a criminal offense. In addition, in at least eight states, legislatures debated proposals that would expand concealed carry provisions on college campuses. Free speech was also a hot button issue. While over fourteen states had proposed bills on the general topic of free speech, several considered legislations on the teaching of topics considered contentious such as critical race theory (Smalley, 2022).

Affordability has been and remains a top education issue even with state budgets bouncing back from the pandemic. Although there had been a positive trend in state funding for higher education prior to the COVID-19 outbreak, it has not been sufficient to counter other developments. States and local governments had increased funding for higher education for eight consecutive years through the 2019-2020 academic year after four years of decreasing monies (College Board, 2021, p.3). As important as state and local appropriations are, tuition and fees remain the largest source of funding for four-year institutions. Student enrollments are critical to the financial well-being of higher education. Unfortunately, public four-year institutions saw a drop of 66,640 students (1%) and public 2-year institutions saw a drop of 323,420 students (8%) between fall 2019 and fall 2020 (College Board, 2021, p.3). After years of continued growth in the number of international students, there was a 10% drop in the number of international students between fall 2019 and fall 2020 (College Board, 2021, p.7). Additionally, inflation continues to be a concern. Although U.S. Secretary of Treasury Janet Yellen made optimistic prediction regarding the risk of inflation in 2021, it is currently running at a near four-decade high. Secretary Yellen attributed the unexpected spike in inflation to the length of the pandemic and the war in Europe (Liptak, 2022). During the 2020-2021 academic year, colleges worked to contain the cost of tuition and fees. Many either froze both or had minimal increases. With the combination of falling student enrollments and continued inflation there is a pressure on institutions to increase tuition and fees (Smalley, 2022).

Key Terms in this Chapter

Digital Divide: Disparities in Internet usage, skills, and access based on factors including race, income, and the rural/urban divide.

Human Capital Theory: An economic theory that argues that government investment in education can contribute to economic growth as well as help reduce inequalities based on income and race.

Higher Education Act of 1965: Federal act passed during the Johnson Administration as part of the Great Society Program meant to help more Americans obtain a college degree.

Servicemen’s Readjustment Act (1944): Federal act passed in 1944 providing returning soldiers with funds for education and training, housing, and unemployment insurance.

Digital “Homework Gap”: Disparities in Internet access based on factors including race, income, and the rural/urban divide that result in students having difficulty completing their homework and keeping up with classes.

Balance Wheel Model: Theory that argues that when the economy is good, state legislatures will increase monies for higher education at a faster rate than other government services. The reverse is also true, when states face an economic downturn, they are more likely to decrease funding to higher education at a faster rate than other budget categories.

CARES Act (2020): A $2.2 trillion economic stimulus bill passed by Congress in response to the economic impact of the COVID-19 pandemic.

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