By Catherine Brown, Senior Director, Policy and Advocacy
Reading time: Five minutes
In a year when National College Attainment Network (NCAN) members may be searching for some good news, SHEEO, the State Higher Education Executive Officers Association, delivered last week with its annual report on state higher education spending. For the second year in a row – and only the second time in 15 years – state funding to public colleges and universities in the United States exceeded per-student funding levels prior to the Great Recession and continued
an 11-year continuous run of growing state appropriations for higher education.
The increase in state investment, combined with federal stimulus funding and a decrease in college enrollment, led the all-important net tuition and fee revenue metric, a calculation of how much students and their families contribute to total
higher education revenue in states, to fall by 3.3%, its largest single year drop since 1980 when SHEEO began collecting this data. While it’s too early to call it a trend, and it’s fueled by falling college enrollment, this development may mark
a turning point in state disinvestment in higher education.
On average, states and local governments spent $11,040 per student on public colleges and universities in 2023, according to the report, with $10,488 per student going to community colleges and $12,413 going to four-year institution. Those figures
represent an increase of 3.7% over inflation. State financial aid reached a record level of $1,050, but still made up less than 10% of education appropriations.
On all these measures, national averages mask vast differences between states. While the national average of state and local spending has exceeded pre-Great Recession levels, 25 states still fund higher education at lower per student levels than they did in 2008,
with Arizona, Louisiana, and Nevada more than 30% below their 2008 funding levels. At $3,990, New Hampshire spends the least per student on public higher education. Vermont, Colorado, Delaware, and Rhode Island round out the bottom five lowest spending
states.
Of great interest to NCAN members is the question of whether college is affordable for the students we serve. The two metrics that most clearly answer that question in my view are net tuition revenue, or how much students and their families are contributing
to the total cost of higher education, and student share, or the percent of the pie (total higher education revenue) that’s coming from students and families.
As you can see in the chart below, Florida has the lowest net tuition and fee revenue per student in the country at $2,461, with California just above at $2,717. Delaware, conversely, has net tuition and fee revenue of $19,338, nearly eight times as high
as Florida. Colorado, Alabama, Michigan, and Vermont share company with Delaware as the top five states with the highest tuition revenue per student. It’s important to note that these measures are averages and not segmented by income. States
that provide substantial financial aid to low-income students (so-called “high tuition, high aid” models) could have average net tuition revenue relative to other states and still offer affordable, equitable postsecondary education options.
Net tuition and fee revenue is closely related to another key affordability metric: student share, which represents the proportion of total higher education revenue made up by tuition and fees. States that have a high “student share” are relying too heavily
on tuition and fees relative to other sources of funding like state appropriations. Student share has just about doubled since 1980, illustrating the rising cost of college to students
and partly explaining the explosion of student loan debt over the last decade. In 2013, the student share was at a record high of 47.5%. It has dropped steadily and substantially since then, and this year’s SHEF report finds that student share is
lower than it was five years ago in all but a handful of states. Despite this progress, tuition and fees still contribute 40% of higher education revenue on average, and there are wide regional differences. New Mexico’s students contribute
the smallest share at 13% while Colorado, New Hampshire, Delaware, and Vermont students all contribute more than three-quarters of total higher education revenue.
The Midwest – where every state except Illinois has a student share way above the national average – continues to have by far the highest student share of any region in the country while the West, driven by California’s large population and low net tuition
revenue, is the lowest.
Midwest states
Student share
Indiana
62.9%
Iowa
61.9%
Michigan
61.3%
Ohio
57.6%
Minnesota
52.3%
Illinois
28.6%
State financial aid, the portion of state higher education budgets that has grown the most since the Great Recession, continued to grow this year according to the report. State financial aid has steadily increased over the last two decades, reaching an
all-time high of $1,050 per full-time equivalent student in 2023 and rising by 2.5% between 2022 and 2023. Again, we see wide variations between states, with Montana providing only $44 per student on the low end and Tennessee providing $3,478 per student
on the high end. Hawaii, Arizona, Michigan, and South Dakota round out the five states that spend the least on financial aid while New Mexico, Georgia, South Carolina, and Kentucky provide the most. At the risk of repeating myself, these averages say nothing about how the funds are targeted, whether the programs are need-based, and how a state’s financial aid programs fit into its overall affordability picture.
Since state financial aid constitutes only 9.5% of state higher education appropriations, advocates must pay attention to other areas of investment like operational support for public colleges and universities, to make college more affordable.
We end on an important note about enrollment, and this report brings sobering and timely news. Postsecondary enrollment declined for the 12th consecutive year in 2023, with public institutions losing an additional 50,464 students. Because of challenges
with the 2024-25 Free Application for Federal Student Aid (FAFSA) rollout, completion rates are down 20.5% relative to last year, which is twice the magnitude of the decline we experienced
during the pandemic that led to the largest single year enrollment dip in history. In short, we are on track to experience another year of devastating enrollment drops that will have lifelong implications for the students we serve. But with aggressive
action, we can change this trajectory! Act now to apply for the $50 million federal
FAFSA Student Support Strategy funding, being administrated by ECMC.
To unpack more about state higher education financing, including sectoral and state differences, we encourage you to explore the findings and reach out with questions about the FAFSA Student Support Strategy or anything else.
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