Thursday, June 8, 2017

Despite Politicians Claims, State Funding Levels Have Little Effect On Public College Tuition

From The Wall Street Journal, "What Causes High Tuition? Don’t Trust Your Intuition: When states cut spending by $100, students at public colleges do pay more—but the increase is only $5." by Preston Cooper:
Tuition goes up no matter what state legislators do. Public colleges, with state boundaries insulating them from competition, and generous federal student aid programs at their disposal, charge as much as they can get away with. Changes in state funding are largely irrelevant.

In a new study, I compare tuition and direct state funding changes at four-year public colleges between 2004 and 2015. This covers both a boom in state funding (2004-08) and a bust (2008-12). Sure enough, the relationship is quite weak. Less than 5% of changes in state funding pass through to higher tuition. In other words, if funding falls by $100 per student, tuition will rise by less than $5.

Colleges do tend to cut spending when state funding goes down. But the expenditures they cut are usually in areas unrelated to instruction, such as research and administration. When funding goes up, colleges largely plow that money into higher spending rather than return it to students through lower tuition.


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