“Public” in public college may be endangered
Public colleges and universities are in trouble. Campuses may not reopen this fall, potentially gutting tuition and dormitory revenues. Endowments have been hit by the falling stock market, and alumni donations may dry up. Institutions without a financial cushion will struggle to survive.
Looming ahead is an even bigger problem, one that will last for years after the pandemic itself is over. The severe economic contraction is pummeling state tax revenues. Moody’s Analytics projects a 20% decline in state receipts next fiscal year.
If historical patterns repeat, public college and university budgets will be slashed, sending tuition and student loan debt skyward. Some institutions will be so starved of funding that they will effectively cease to be “public” at all. Others will have a greatly diminished ability to help students learn.
Many colleges never fully recovered from the Great Recession. In 2008, commitment to higher learning already varied widely among the states, with spending per student ranging from less than $7,000 in Ohio, Pennsylvania and Colorado to more than $10,000 in North Carolina, Massachusetts and New York.
Over the next five years, almost every state cut college spending, often more than other public services. Lawmakers know that colleges can increase tuition to make up lost revenue, while K-12 schools and prisons can’t. By 2013, state spending on higher education was still down almost 22% from the pre-recession peak, adjusted for inflation. Tuition had increased by 27%.
What happened next was revealing, and should make students, families and professors in many states especially worried.
As the economy continued to grow, some states restored most or all of the recession-era cuts. By 2019, states including California,
New York, Nebraska and Oregon were funding public colleges at levels higher than 11 years prior.
But other states made different choices. Arizona, Louisiana, Alabama and Pennsylvania had all reduced college funding per student by more than 30%. Rather than fill those budget holes, they mostly left them in place. Public university tuition in those states soared.
What happens if public higher education takes it on the chin once again?
Daniel Greenstein is chancellor of the Pennsylvania State System of Higher Education, a network of 14 public universities educating nearly 100,000 students. After the last recession, Pennsylvania lawmakers cut overall public higher education spending statewide to $4,300 per student from about $6,900. If a similar cut were enacted again, it would bring funding to barely $2,000 per student.
“If we have a recurrence of what happened in the past,” Greenstein said, “it would be catastrophic.”
Tuition and fees rose sharply after the last downturn, he notes.
As a result, enrollment rates declined among lowand moderate-income people who could not afford to pay.
Nationwide, the effect of the last recession on university finances was partly offset by tuition increases financed by federally guaranteed student loans.
In the future, colleges and universities can’t rely on students and parents borrowing to make ends meet. Many are already taking out the maximum allowable amount of federal loans.
Some universities offset budget cuts by aggressively recruiting foreign and outof-state students, who pay much higher tuition rates. Alabama cut funding by nearly 40% after the Great Recession.
Most of those dollars were never restored. In response, the flagship University of Alabama sent recruiters fanning out across the nation. Today, the majority of undergraduates in Tuscaloosa are from out of state.