Going Broke From College Tuition? Thank the States.
The cost of a bachelor's degree at a public university went up 46 percent in real dollars from 2000 to 2010, prompting President Barack Obama to make tuition a central part of his push for the middle class. So maybe we should talk about what's actually causing the problem: State governments.
Unlike, say, medical care, rising tuition costs don't reflect an increase in the underlying cost of the service being provided. Over the same 2000 to 2010 period, education and related spending per full-time student rose just 6.4 percent for bachelor's programs at public institutions, controlling for inflation. Operation and maintenance costs actually fell during that period, as did academic support. For master's degrees, the increase was even less -- just 4.4 percent.
So what was behind the skyrocketing tuition? Mostly falling state support. While the recession put extra pressure on state budgets, the share of spending that goes to higher education has been slipping for 15 years. In 1998, 13.1 percent of state general-fund spending went to higher education. By 2012, that was down to 10 percent.
That translates into a significant drop in funding per student. In 2001, state governments appropriated $8,427 for each full-time student or equivalent. By 2012, that had fallen to $5,906, a reduction of almost a third. (Both figures are in 2012 dollars.)
To make up the difference, colleges and universities have leaned harder on students. The share of revenue that comes from tuition rose from 29 percent in 2000 to 47 percent last year at public institutions. In 2000, state and local money for research and master's programs made up twice as much funding as tuition; by 2010, those lines had crossed, with tuition now exceeding government funds.
In other words, "tuitions increased primarily to replace institutional subsidies," write Steven Hurlburt and Rita J. Kirshstein at the American Institutes for Research's Delta Cost Project, "not to enable new spending."
Obviously, the decisions facing state policymakers aren't easy. Medicaid costs are increasing faster than revenue. And Medicaid, like prisons and elementary schools, can't just charge people more for the services they receive. So the declining spending on higher education probably reflects a lack of good options for budget writers, and their perception that universities, unlike other recipients of state spending, can always raise more money through tuition.
But solving the surge in tuition starts with understanding what's causing it. When Obama gave his speech on college costs last month, he devoted all of one sentence to state budgets, calling on states to "do their part by prioritizing higher education in their budgets." Let's go one step further: Every time a state proposes cutting income taxes, voters should ask how much of what they gain will go straight into higher tuition. Otherwise, all the clever experiments in the world won't fix the problem.
(Christopher Flavelle is a member of Bloomberg View's editorial board. Follow him on Twitter.)