A recent report from the Center of American Progress has advocated for the importance of public investment in the higher education system.
The report, “A Great Recession, A Great Retreat,” suggests that higher education plays an important role in the economy by offering students the ability for an increase in personal economic growth, as well as offering a high return on public investment through a well-educated workforce. The economy will see further growth through higher employment rates, the report says, by allowing people to stay employed longer, achieve higher earnings, continue business development and drive higher tax revenues.
In 1947, the federal government began making investments in the higher education system on the suggestion of the Truman Commission on Higher Education in an effort to make post-secondary education more attainable for all students. Over the following 30 years, a number of recommendations made by the commission were adopted, and greater numbers of high school graduates continued on to college.
While the federal government has contributed to funding higher education, schools are more reliant on investments at the state level. It is this investment, the report suggests, that is important to keeping costs low for students and making an education affordable for all.
Despite this, college costs are on the rise. The number of students who borrow money to attend college has risen from 35% in 2008 to 40% in 2012, with the average amount being borrowed yearly rising from $6,200 to $7,800. In addition, the Great Recession has caused many states to lessen their investments in higher education, causing a decline in the number of lower and middle-income students in attendance.
While college costs have risen, the annual family income has also fallen by 3%, causing a swell in the percentage of family income devoted to college expenses as well as a rise in student debt.
All of this translates to a decrease in college access, higher costs, and an increase in debt.
In order to combat these effects, the federal government has promoted several programs, including $17 billion in the Pell Grant program, which aims at making college affordable; a tax credit up to $2,500 per year for families that earn up to $180,000 annually; and recently, an additional $36 billion added to the Pell Grant to ensure financial stability for the program.
While these investments have helped to lessen the burden on families, more is needed as the decline in state investment continues to be an issue, says the CAP.
The report discovered that the decrease in state funding has led to an increase in tuition. States that saw the largest decrease in state investment also had the highest tuition hikes, with two-year community colleges being disproportionately affected.
The authors of the report suggest the creation of a new fund that would link federal and state investments in an effort to influence states to further invest in higher education by requiring them to match federal grants.
In order to be eligible, states would need to sign and agree to a Public College Quality Compact that would require the creation of reliable funding through new funding streams that would need to provide “at least as much as the maximum Pell Grant per student” and to make college affordable by ensuring grant aid reaches low-income students. The Compact would result in the removal of barriers through a standardization of transfer credits and admission requirements, as well as raising standards in K-12 programs to a college readiness level.