Universities Wrestle with Funding Cutbacks as Tuitions Soar

Friday, 22 Mar 2013 08:17 AM

By John Morgan

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America’s public colleges and universities are slashing expenses, hiking tuitions and firing teachers as they struggle with big cutbacks in state funding, according to a report from the Center on Budget and Policy Priorities (CBPP), a Washington think-tank.

State and local financial support of public colleges fell 7 percent in 2012 to $81.2 billion, according to the State Higher Education Executive Officers Association (SHEEO). Per student support slumped to $5,896, the lowest level in 25 years.

Meanwhile, the cost of attending college keeps going up. The annual tuition at four-year public colleges has jumped 27 percent since the 2007-08 school year.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

In some states, the increase is even higher — in the last five years, tuitions at public colleges in Arizona and California have vaulted more than 70 percent, the report revealed.

“It sets a really dangerous trend,” Phil Oliff, senior policy analyst with CBPP, told CBS MoneyWatch.

“Growing tuition beyond the ability to pay for college is really discouraging our young people from getting college degrees and getting the economic skills they need to succeed in the work force. It's safe to expect that the enormous rise in college costs is dissuading students from attending college."

Every state except for North Dakota and Wyoming is spending less per student than they did before the 2008 financial crisis.

“Students are paying more, while public institutions are receiving substantially less money to educate them,” said Paul Lingenfelter, president of SHEEO.

“The educational and economic edge the United States once enjoyed in comparison to other nations is eroding rapidly,” SHEEO stated.

Of the states that have cut public college funding, 36 reduced it by more than 20 percent, while 11 have cut it by more than one-third, according to the report. Arizona and New Hampshire have slashed their higher education spending in half.

"The long-term economic impact is very significant," Oliff told MoneyWatch. "Higher education attainment is growing increasingly important. Getting a college degree is increasingly a prerequisite for success in the work force and entry into the middle class.

“A large and growing share of future jobs is going to require higher education."

Even as state funding to public colleges has declined, the federal government has vastly expanded it student loan programs.

Richard Vedder, director of the Center for College Affordability and Productivity, said that in 1970, the federal government’s student financial assistance programs totaled slightly more than $1 billion. In 2012, it was $173.8 billion.

“The default rate on student loans is above 12 percent, exorbitantly high by commercial lending standards,” Vedder said.

“The more students borrow, the easier it is for colleges to raise tuition fees to pay for the comfortable lifestyles of administrators and professors.”

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

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