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When State Funding for Higher Education Dries Up, the Poorest Students Suffer the Most

That’s the key finding of Ithaka S+R’s new report, “The Effects of Rising Student Costs in Higher Education: Evidence from Public Institutions in Virginia.” Taking advantage of a uniquely comprehensive and detailed dataset managed by the State Council of Higher Education for Virginia (SCHEV), authors Christine Mulhern, Richard R. Spies, Matthew P. Staiger, and D. Derek Wu analyze trends in state aid, what students pay to attend, and student outcomes. Their work has yielded some of the strongest statistical evidence to date of the relationship among these trends.

Since the Great Recession, Virginia has cut appropriations to its public colleges and universities by 30 percent (after adjusting for inflation). During that time, net costs for all students have risen faster than inflation, each year. The poorest fifth of students, however, have seen their inflation-adjusted costs for higher education rise nearly 35 percent more than students from the top income quintile.

This disparity has real consequences. Using a variety of statistical methods, the authors show that higher costs negatively impact retention and graduation, and that the outcomes of poor students are more sensitive to changes in costs.

In other words, Virginia’s funding policies, and the way institutions have distributed costs in response, are exacerbating an already wide achievement gap between the state’s wealthiest and poorest students.

The report includes a set of recommendations – including performance-based funding, focusing on productivity, and bolstering need-based financial aid – for states and institutions to mitigate the harm these trends have caused.  To its great credit, SCHEV not only opened its database to these analyses, but is actively considering these and other strategies for addressing the problems they identified.

As a final, important note, Virginia is by no means unique in this regard.  State appropriations are down and student costs are up in nearly every state.  At a time when a college degree has greater value than ever before, this report makes clear just how dangerous those trends are.

Comments on: When State Funding for Higher Education Dries Up, the Poorest Students Suffer the Most

  1. Thank you! Your report helps provide key evidence about what is happening for low income students. I was especially interested to see that you linked enrollment data with FAFSA data to get the correct income levels. Most of us have to rely on student self-report when notoriously leads to under reporting parental income. Nice work and hopefully it help other states to see the value in linking data across various student systems.

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