Why higher-ed budget cuts are so devastating

Co-written with Demos Senior Policy Analyst Robbie Hiltonsmith.

Over the last decade, states have made massive cuts to higher education, with average state support falling from $9,729 per student in 2001 to $6,815 in 2011. While a large share of the blame for these cuts can be pinned on the financial crisis and subsequent recession, some of the decline is due to a deliberate effort to eviscerate public higher education. For instance, Bobby Jindal plans to savage higher education spending in Louisiana to the tune of $141.3 million, or about 12 percent of the state’s higher education budget, to pay for tax cuts. In Wisconsin, Scott Walker is cutting $300 million over two years, again to pay for reckless tax cuts. Kansas is an even sadder story. Though the state had a large reserve fund in 2012, Governor Sam Brownback quickly depleted it with a massive tax giveaway to the rich. Now he’s cutting K-12 and university funding to the tune of $44.5 million. There’s a good reason our list of governors seeking deep cuts is shaded a uniform red: Both research and history shows that Republican-controlled states are more likely to cut higher education. One study found that when Republicans take over governors mansions they reduce spending on higher education by $0.23 per $1,000 in personal income (a measure of the state’s total tax base). Each 1 percent increase in the number of Republicans in the legislature leads to a $0.05 decrease. Given that theaverage spending on higher education across all states in 2014 was $5.47 per $1,000, the effect is large.

Nationwide, the total impact of these cutbacks is breathtaking. Between 2008 and 2013, states cut a total of $16 billion, adjusted for inflation, from their higher education budgets, even as enrollments rose more than 11 percent. Funding per student dropped even more dramatically, falling by more than 27 percent, or about $2,500 per student. These cutbacks, in turn, have translated nearly 1-to-1 into tuition increases, which averaged nearly $3,000 over the past decade. But the question is not simply deficits, but priorities: Just seven months of funding for the F-35 Fighterwould be enough to fully restore higher education spending across the nation.

A new Demos study estimates that 78 percent of tuition increases at public universities in the past decade can be explained by decreased state spending on higher education (see chart). Commonly cited factors like “administrative bloat,” are far less important, accounting for only 5 percent of the increase in higher education costs.

These state cuts and resulting skyrocketing tuition prices are incredibly worrying for upward mobility in America, because they’ve forced young people seeking a college education to borrow unprecedented amounts just to earn a degree. Low-income students and students of color leave college with more debt than wealthy white students (see chart), and they bear the brunt of austerity.

Public universities and community colleges are important, because the top tier of private universities are very exclusionary, and few poor and middle class students are admitted. Further state cuts to higher education will create a world where only some, mostly wealthy Americans have a shot to better their life by completing higher education.

It’s not just progressives making this point; recently, Standard & Poor’s argued that inequality was slowing growth by reducing college graduation rates among low-income people, likely in part due to the effects of the debt necessary to finance low-income students’ educations. The analysts suggested that a way to bolster upward mobility and reduce inequality would be increased college attainment. Yet in recent years, many conservatives, who claim to support economic growth and business, have made savage cuts to education.

These cuts are particularly shortsighted because the benefits of higher education, both for individuals and society at large, pay for the cost of investment many times over. The body of research on the impacts of higher education is massive, but their consensus is that increased higher education impacts nearly every corner of society, from increased economic growth to lower crime, better health, greater civic participation, and even childhood development. A few highlights: One study foundthat 8.7 percent of all economic growth between 1959 and 1998 could be attributed to increased education. Other studies have found that increased higher education leads greater rates of voter participation, to the tune of 22 percent; a 15 percent reduction in crime, and better cognitive development among children of parents with college degrees.

On the flip side, the costs of state disinvestment in higher education are similarly staggering. Further state cuts will lead to even higher levels of student debt, which then leads to lower homeownership rates, less retirement savings, and fewer vehicle purchases, among other effects. Previous Demos work suggests that $53,000 in student debt will lead to lifetime wealth loss of $208,000, largely through lower retirement savings and home equity.

Although public investment in higher education is broadly popular, the wealthy tend to be the least supportive. In their recent study of the wealthiest Americans, Benjamin Page, Larry Bartels and Jason Seawright find that 78 percent of the general public agree that “[t]he federal government should make sure that everyone who wants to go to college can do so,” compared to only 28 percent of the richest Americans.

There are bright spots in this sad story: President Obama’s plan for free community college is a welcome opportunity for the government to step in and fill this gap. Two weeks ago Senate and House Democrats introduced a resolution to create debt-free higher education. Hillary Clinton says she’ll be rolling out a comprehensive plan to tackle student debt. On the other side of the aisle, the House Republican budget would eliminate guaranteed funding for Pell Grants, which helped 9 million low income students attend college in 2013-2014 school year. One analysis suggests that some students using the Pay As You Earn (PAYE) program would end up with twice the debt under the Republican budget proposal. They would also As the national discussion about higher education proceeds it’s important to remember the government has an important role to play in supporting debt free higher education.

Robbie Hiltonsmith is a Senior Policy Analyst at Demos and author of “Pulling Up the Higher-Ed Ladder: Myth and Reality In The Crisis of College Affordability.”

This piece originally appeared on Salon.