ERIC Number: ED498314
Record Type: Non-Journal
Publication Date: 2003-Sep
Reference Count: 0
Higher Education Spending: The Role of Medicaid and the Business Cycle. The Brookings Institution Policy Brief #124
Kane, Thomas J.; Orszag, Peter R.
In recent years, many public colleges and universities around the country have announced double-digit increases in tuition. The recession and the resulting squeeze on state revenues are the immediate causes. However, the short-term crisis should not be allowed to obscure a longer-term shift in state financing of higher education, which began more than a decade ago. As states have struggled to respond to other demands on their budgets--primarily due to rising state Medicaid obligations--parents and students have been asked to pay an increasingly large share of the costs in public higher education. Public colleges and universities should not expect much respite when the current crisis recedes. In many states, the cuts imposed on higher education during the last recession in 1990-91 were not made up in the subsequent recovery. Because Medicaid expenditures are expected to grow rapidly over the coming decades, state support for higher education is likely to come under increasing pressure, even as state revenues recover. Since roughly three-quarters of all college students in the United States attend public institutions, the implications for the nation's higher education system are profound. This brief concludes that the American system of financing higher education is based upon large state operating subsidies to public higher education that have traditionally been used to keep tuition low for all students, regardless of need. While reform proposals like ours exist, they are unlikely to be enacted until the problem is more broadly appreciated and understood. At the very least, a public debate on the structure of financing higher education in the United States is in order. The traditional financing approach--low public tuition is financed by state government subsidies, while modest federal means-tested aid programs fill in the gaps for low-income students--seems increasingly untenable. (Contains 1 figure and a list of related Brookings resources.) [This policy brief is based on "State Fiscal Constraints and Higher Education Spending," by Thomas J. Kane, Peter R. Orszag, and David L. Gunter (Urban-Brookings Tax Policy Center Discussion Paper No. 11, May 2003), and "Funding Restrictions at Public Universities: Effects and Policy Implications," by Thomas J. Kane and Peter R. Orszag (Brookings Institution working paper, September 2003).]
Descriptors: Higher Education, State Aid, Economic Climate, Public Colleges, Educational Finance, Educational Trends, Student Costs, Paying for College, Tuition, Welfare Services, Financial Problems, Access to Education, Student Financial Aid, Federal Aid, Educational Strategies, Finance Reform, Economic Factors, State Programs
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Publication Type: Reports - Evaluative
Education Level: Higher Education; Postsecondary Education
Authoring Institution: Brookings Institution, Washington, DC.