One major factor driving student loans into the stratosphere dates back to the recession, in which public colleges increased tuition to compensate for state funding cuts. With the economy tip-toeing through a tepid recovery and state budgets getting a little breathing room, last year marked the first time since the downturn that state and local governments increased funding for higher education on a per-student basis.
A report from State Higher Education Executive Officers tabulated a reversal in the pattern of public funding cuts after accounting for inflation, larger appropriations, and the slight decreases in enrollments that came as the economy rebounded.
State budgets are getting even more good news this tax season. Improved housing markets have property tax collections making the biggest gains since 2009. This is important because local tax appropriations are covering a higher share of public college costs, as the new report also shows. In New York, meanwhile, the state budget posted its first surplus since 2008. Some states have used the rebound to freeze tuition. Janet Napolitano, head of the University of California system, has vowed to not to raise tuition in 2014 and 2015.
If history offers any lesson, it’s unlikely that general improvement in the economy will let schools significantly roll back their dependence on tuition. Following previous recessions, colleges barely—if at all—cut back tuition prices that had pushed up during bad times; higher-education budgets have not typically bounced back to pre-recession levels. With each recession, the heightened tuition essentially becomes a new, higher floor for future increases.
As the Chronicle of Higher Education reported last month, the result has been a decades-long erosion in public support for higher education. While state funding increases may temporarily slow the shifting of costs from taxpayers to students, only an unprecedented U-turn could shrink tuition levels to where they were just five years ago.
