Reverse tactic of shifting costs to students

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By Tom Mortenson


Iowa’s annual investment in higher education declined from $914 million in fiscal 2009 to $739 million by fiscal 2012. During a period when higher education is more important to economic growth and prosperity than it has ever been in Iowa, our leaders have chosen to sharply reduce state investment in higher education.

The decline in state support began a decade ago, when Gov. Tom Vilsack shifted state money from higher education to K-12 education to improve teachers’ salaries.

Iowa’s fiscal support for higher education declined from $11.42 per $1,000 of personal income in fiscal 2001 to $9.84 in fiscal 2002. Since then, Govs. Chet Culver and Terry Branstad have overseen continued reduction in the state’s higher-education investment. By fiscal 2012, it had reached $6.36 per $1,000 of state personal income — the lowest level on record in data reported since fiscal 1961.

In response to declining state fiscal support, Iowa’s public universities and community colleges have raised tuition charges. Between 2001 and 2010, state per capita personal income increased by about 8 percent (constant dollars), but undergraduate tuition at the University of Iowa increased about 99 percent, and by about 75 percent at the state’s community colleges. The costs of operating public colleges and universities have been shifted from state taxpayers to students and their families.

Iowa has chosen to try to make higher education policy, program and funding decisions on the fly, guided by short-term political expediency. The evidence that should have guided informed policymaking, but apparently hasn’t, includes at least the following:

l Iowa is not a high-income state. Iowa’s per capita personal income is about 90 percent of the national average and has been for decades. Many Iowans cannot afford the higher tuitions from this cost-shift from taxpayers to students.

l The share of Iowa children eligible for free or reduced-price school lunches because their families’ incomes are below 185 percent of the federal poverty level has grown from 23 percent in 1989 to 37 percent by 2010. Most of this growth has come since 2002. These children don’t have family resources for college costs.

The consequences of this ill-informed, ad hoc and shortsighted policy process are evident in the data I compile to measure higher education opportunity for students:

l Iowa’s college continuation rate for its recent high school graduates peaked at 64.5 percent in 2000, ranked seventh among the states.

l By 2008, Iowa’s college continuation rate was 64.3 percent, and the ranking at 22nd.

l Iowa’s college graduates leave higher education with among the highest levels of student loan indebtedness of any state. This debt leads many to seek employment in other states that offer higher wages.

Iowa has shifted from a state with a strong record of investing in its future through higher education, toward a state that borrows against its future by shifting the costs of higher education from taxpayers to students and their future incomes.

Moreover, in their search for more tuition revenue, Iowa’s public universities are enrolling fewer students from lower-income families because they can’t afford the rising tuition costs.

Meanwhile, the universities also have moved toward enrolling more non-resident students. These non-residents pay about three times higher tuition rates than do Iowa residents and have the least loyalty to remain in Iowa after they graduate.

Iowa needs to rethink its commitment to public higher education. The annual budget process is clearly the worst place to undertake such a review — a decade of simply awful policy and funding choices make that clear.

Perhaps an existing state agency, such as the Iowa College Student Aid Commission, could undertake the needed review. Or a citizen commission, as many other states have chosen. Whatever vehicle is chosen, the state and its universities need to reverse the direction they are heading.

Tom Mortenson of Oskaloosa is a higher education policy analyst and a Senior Scholar at the Pell Institute for the Study of Opportunity in Higher Education, Washington, DC. Comments:

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