Public Universities: Refocusing from Low Income to Non-Resident

Public higher education has been treated brutally in state budgeting since about 1980. States have been shifting their fiscal resources toward corrections (prisons, law enforcement, courts) and Medicare (health care for poor people) and away from everything else, especially public higher education. The resulting fiscal pressure on public universities has led directly to higher tuition charges to students.

Less obviously state universities have increased their pursuit of non-resident students who typically pay tuitions that average 271 percent of those paid by state resident students according to tuition date reported by the Washington Higher Education Coordinating Board. Between 1994 and 2002 the share of first-time freshmen at public universities and 4-year colleges increased from 15.0 to 16.2 percent of all admitted freshmen. The non-resident share of freshmen increased in 36 of the 51 states (including DC), and decreased in the remaining 15 states. The states with the largest increases in non-resident shares of freshmen enrollments between 1994 and 2002 were Hawaii (+18.9%), Rhode Island (+16.0%) and Delaware (+14.3%).

Even less obvious than the shift from state residents to non-residents is the shirking of Pell Grant recipient enrollment by public universities. Low income students do not make much money for public universities desperately seeking alternative revenues to offset declining state support. Undergraduate Pell Grant recipients are probably more costly because they may come to campus less well prepared for the academic and social challenges of college enrollment. Between 1992 and 2003 the share of Pell Grant recipients in public universities increased by 2.6%, compared to an increase of 6.2% for all postsecondary education. Low income student enrollment growth has been shifted primarily to community colleges and to a lesser degree to proprietary schools.

The public university shift toward non-residents and away from low income students makes short term budget sense. It helps fill budget gaps created by inadequate state appropriations. But it also further disengages state universities from the needs of their states, such as the growing share of students in the K-12 pipeline that are on free or reduced price school lunches (family incomes below 185% of federal poverty level). State universities focused on higher educating the affluent and non-residents weaken their claim to state financial support. Both public universities and state budgeteers are locked in a death spiral of mutual self-destruction. Both should ponder the consequences of the decisions they have made over the last 25 years. Our future depends on very different choices.