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By Julia Glum
May 5, 2020
Getty Images

Most state funding for public colleges and universities is still not up to pre-recession levels — and it could put schools in a difficult position as they reckon with financial effects of the coronavirus crisis.

State and local support for higher education institutions increased 2.4% per student and crossed $100 billion for the first time in the 2019 fiscal year, according to a report out Tuesday from the State Higher Education Executive Officers Association.

Although that caps off nearly a decade of increases in per-student education spending, the majority of states have not been able to fund schools at the levels they were before 2008. As a result, colleges are relying more than ever on students for cash.

And with another recession looming, that need for revenue from tuition and fees will likely grow.

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“States have many budget priorities, and often higher education is the first place to be cut,” the association’s president, Robert E. Anderson, said in a news release. “Public higher education is entering a period of economic uncertainty in an unstable position.”

As far as local funding goes, not every state is in dire straits. Seven of them — Alaska, California, Hawaii, Nebraska, New York, Oregon and Wyoming — saw appropriations rebound after the Great Recession, according to the report. Overall, net tuition revenue actually declined in 2019.

But in 26 states, tuition dollars make up more than half of the total revenue at public institutions. The most drastic case is in Vermont, where the student share of revenue was nearly 87% in 2019.

That’s a tough situation to be in during (and after) a pandemic, when students may struggle to afford tuition payments.

Colleges are already putting out estimates of coming losses. The University of Kentucky said it’s predicting a $70 million deficit next year; Iowa State University has projected an $88 million shortfall. Nationally, education advocates have forecast a 15% enrollment drop and a $23 billion revenue loss.

“The basic business model for most colleges and universities is simple — tuition comes due twice a year at the beginning of each semester,” Brown University President Christina Paxson wrote in a recent New York Times column. “Remaining closed in the fall means losing as much as half of our revenue.”

So while students mourn the loss of packed football games and large in-person lectures, education officials are dealing with a bleak outlook of their own. Last year, public institutions received an average of $1,800 less in funding per student than they did before the 2001 recession, according to the report.

Higher education enrollment often grows during a recession because people lose their jobs and return to school to learn new skills and earn certifications. That typically means public colleges can bring in steady tuition revenue even if state funding falls. But with the coronavirus, it’s not clear whether students will be able to flood campuses this fall — let alone whether they’ll want to.

“Without adequate state funding, and with huge uncertainty surrounding fall enrollment and tuition revenues, public institutions will lack the resources they need to properly serve their students in the coming year,” Anderson said.

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Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

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