The Cost of Learning: State and Student Roles in Higher Education Funding
Introduction:
Public higher education in the United States has undergone significant shifts in its funding model from 2008 to 2022, reflecting deep-rooted challenges in state support and increased financial pressures on students. Drawing on the comprehensive report by Kunkle, K., & Burns, R. (2024) from the State Higher Education Executive Officers Association (SHEEO), this blog post analyzes these shifts in cost-sharing dynamics. It focuses on the interplay between state funding, student contributions, and grant dependencies, while offering policy solutions aimed at mitigating affordability and access challenges for today's students.
Shift Over Time:
The cost-sharing model for public higher education in the United States has undergone significant transformations between 2008 and 2022, primarily driven by fluctuations in state funding. This shift has resulted in changing proportions of financial responsibility borne by states, students, and grants.
In 2008, states shouldered almost half the cost, with a 49.2% state share in total education revenue. Students, on the other hand, contributed 34.9%.
By 2012, a critical turning point occurred, with the student share exceeding the state share for the first time, reaching 41.2% while the state share fell to 37.1%. This was largely due to the Great Recession, during which state support for higher education was often cut.
By 2022, there was a positive reversal. States once again assumed the largest share of funding, at 39.6%, while the student share dropped to 37.6%. This suggests a renewed commitment from states to support public higher education.
Financial Challenges Persist:
Despite this recent trend, the overall cost of higher education has continued to rise. This means that even with increased state support, students are facing significant financial challenges. The SHEEO document highlights several key aspects of this evolving cost-sharing model:
The role of grants, particularly Pell Grants, has become increasingly crucial. The overall grant share rose from 9.4% in 2008 to 15.7% in 2022, demonstrating a growing reliance on grants to bridge the affordability gap.
However, Pell Grants alone have not kept pace with rising costs. While the Pell Grant share peaked at 13.9% in 2011, it declined to 7.9% by 2022. This decline is attributed to the maximum and average Pell Grant award amounts not rising in proportion to the increase in college costs. As a result, students are increasingly reliant on other grant sources and institutional discounts.
Local government funding has remained consistently low. The local share hovered between 6.5% in 2008 and 7.1% in 2022, primarily benefiting public two-year institutions. This suggests a limited role for local governments in the overall cost-sharing model.
SHEEO also notes a trend in which grants cover a declining share of student tuition and fees. This means students and their families are increasingly paying for college out of pocket. One reason for this trend is that Pell Grants have not kept pace with the rising costs of college.
Disproportionate Impact on Rural Community Colleges and Potential Solutions:
The unique nature of rural community colleges makes them particularly vulnerable to the disproportionate impacts of shifts in education funding. Here is why:
Reliance on Declining State Funding: Public two-year institutions have experienced a decline in the state share of funding since 2008. This trend is especially concerning for rural community colleges located in states with already limited resources for higher education. These institutions often serve a higher proportion of low-income students who rely heavily on state-funded financial aid. As states grapple with budget constraints, rural community colleges might face deeper cuts, leading to tuition increases and potentially reduced course offerings, impacting their ability to serve their communities.
Geographic Disadvantages and Limited Local Funding: The sources reveal that local government funding for higher education is generally low and primarily benefits public two-year institutions. However, rural communities often have smaller tax bases, limiting their capacity to generate substantial local revenue to support their community colleges. This lack of local funding diversification leaves rural community colleges particularly vulnerable to state funding fluctuations and may hinder their ability to invest in facilities, technology, and faculty, ultimately impacting the quality of education offered.
Impact of Declining Pell Grant Value on Rural Students: The sources emphasize the declining purchasing power of Pell Grants, which have not kept pace with rising college costs. This trend disproportionately affects rural students, who are more likely to come from low-income backgrounds and depend on Pell Grants to afford college. As Pell Grants cover a shrinking percentage of college expenses, rural students may face greater difficulty meeting the costs of attending their local community college, potentially leading to lower enrollment rates and exacerbating existing equity gaps in higher education access.
Steps to Improve the Rural Community Colleges:
Drawing upon the policy recommendations provided by SHEEO, here are some potential steps to address the potential impact on rural community colleges:
Prioritize State Funding for Rural Community Colleges: States should recognize the vital role of rural community colleges in their local economies and prioritize their funding needs. This could involve allocating a larger proportion of state higher education funding to rural community colleges, considering their unique challenges and student demographics. Targeted funding initiatives could focus on supporting infrastructure improvements, expanding program offerings aligned with local workforce needs, and providing scholarships or tuition assistance specifically for rural students.
Promote First-Dollar Promise Programs Tailored to Rural Communities: As mentioned earlier, states should consider implementing or expanding Promise programs that prioritize rural students attending community colleges. By adopting a first-dollar funding model, these programs would cover tuition and fees before students utilize their Pell Grant, enabling them to use those funds for other essential expenses like transportation, housing, and textbooks. This approach could significantly improve college affordability and accessibility for rural students, supporting enrollment and completion rates at rural community colleges.
Advocate for Federal Pell Grant Increases: To address the declining value of Pell Grants, policymakers and advocates should push for substantial increases in federal Pell Grant funding to keep pace with the rising costs of college. This increased investment in Pell Grants would benefit rural students in particular, helping them overcome financial barriers to attending community college and reducing their reliance on loans.
Develop Strategies to Enhance Local Funding Support: Rural community colleges need to explore innovative strategies to enhance local funding support. This could involve working with local businesses and industries to develop customized training programs that meet specific workforce needs, generating revenue through partnerships and contracts. Community colleges could also engage in fundraising campaigns targeted at local donors and alumni, highlighting the institution's impact on the community and the need for investment in its future.
By implementing these steps, policymakers and community leaders can help ensure that rural community colleges have the resources they need to thrive and continue serving as engines of opportunity for their students and communities.
