Thursday, September 20, 2012

Public Funds For Government Supported Higher Education Decline By 19.6%

This report by the NY Fed shows that the total revenue share provided by state and local governments for public higher education was 70.7% in 2000.  The total government share, which includes federal funds provided by ARRA, fell to 51.7% in 2011. School administrators have been forced to increase tuition, and to seek other sources of income, to deal with the decline in the public share of funding. 

During this same period, full-time student enrollments increased 37%.  Enrollments grew from 8.6 million in 2000 to 11.8 million in 2011 despite the increased cost burden that was shifted to students and their families.  Growth in median household income has been flat during this period.  Much of the additional cost burden has been funded with student loans.

The increase in student enrollments, during a period of rising costs, shows that students and their families are aware of the relationship between higher education and the opportunity for well paying jobs.  Politicians and pundits recognize the relationship between higher education and national competitiveness in an increasingly technical economy as well.  They have done their share, however, to respond to the shift in the cost of higher education to households with little growth in income.  This has the effect of reducing social mobility, and it has also decreased new household formation, which is a source of economic growth. 

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