Lack of public investment shifts costs of college education to students and families

Joo Ning Lim
May 23, 2022
Higher education is a steppingstone for many Minnesotans to further their career goals, gain advanced qualifications in their field of choice, and improve their quality of life. It is also an important component of a robust state economy, a strong workforce, and thriving communities. However, many Minnesotans face significant struggles to afford higher education because of rising tuition costs. Decreasing state funding over the years has dramatically increased costs for students and their families. Cuts to higher education funding reinforce long-standing disparities by limiting access to higher education for many low-income and Black, Indigenous, People of Color (BIPOC) students. 

With rising costs of higher education and families still struggling to recover from the pandemic, Minnesota should invest in affordable and accessible higher education by significantly increasing higher education funding, including in financial aid for those who face the greatest cost barriers. 

The cost burden of public colleges and universities has increasingly shifted towards students and their families

States’ disinvestment in higher education over the past few decades has led to public colleges and universities increasingly relying on the tuition students pay. A report by State Higher Education Finance (SHEF) indicated that nationally, the percentage of tuition that made up total higher education revenue increased by 23 percent between 1980 and 2020.  

State funding cuts led public institutions to rely even more heavily on tuition paid by students. Nationally, students now provide close to half of the revenue of public higher ed institutions. According to a report by the Center on Budget and Policy Priorities (CBPP), 37 states, including Minnesota, cut funding per student between 2008 and 2019. Minnesota’s funding per student decreased by 6.7 percent. 

In response to the inadequate public investment, average tuition and fees have increased at Minnesota institutions. Minnesota public four-year colleges and universities saw a 19 percent increase in average tuition when adjusted for inflation between 2008 and 2019. Over the past decade, the University of Minnesota increased tuition and fees by 23 percent, and Minnesota State four-year universities increased tuition by 28 percent. Students must also pay for other expenses such as housing, food, transportation, and supplies, but federal and state financial aid has not kept up with cost increases in those areas either. 

Rising tuition costs disproportionately harm low-income and BIPOC students

Inadequate state funding translates into rising tuition costs and can result in declining enrollment, widened achievement gaps, reduced campus diversity, higher student debt, and a weakened workforce, reinforcing historical barriers and discrimination that BIPOC and low-income communities have faced. 

CBPP also reported that in 2018, the share of median household income needed to cover the average price of attendance at a public, four-year institution in Minnesota was 22 percent. The same tuition required 43 percent of the median household income for Black households and 31 percent for Latinx households.

These higher cost burdens can reduce enrollment and may have a negative effect on lower-income students’ ability to attend college. Nationally, enrollment of Pell Grant recipients declined by 9 percent from 2020 to 2021. Pell Grants typically go to students whose family incomes are below $30,000. 

Federal emergency aid provided during the pandemic

In March 2021, Congress recognized the crisis in higher education as a result of the pandemic and provided emergency aid to students and institutions through the American Rescue Plan (ARP)’s Higher Education Emergency Relief Fund (HEERF III). The federal government distributed $39.6 billion to public and private institutions to be used for emergency financial aid to students and COVID-19 related expenses. Minnesota received over $565 million through the HEERF to help students remain enrolled and complete their education. However, this federal aid does not make up for decades of disinvestment. 

Policymakers should address rising tuition costs and ease the burden of students most in need

Given that college-educated workers play a significant role in maintaining a healthy and robust workforce, policymakers should increase investments in higher education to ensure that every student has the means to enroll and complete their education at their institution of choice.

In the 2022 Legislative Session, state policymakers are making big decisions on how to use the $9.3 billion projected surplus. This is an opportunity to take aim at the rising cost of tuition and especially to increase investments in need-based financial aid and other economic supports for the students and families who are most in need. By making higher education affordable for all Minnesotans, policymakers would be investing in our workforce and building an equitable economy and future where every person can thrive. 

Stay tuned to see how the final higher education agreement matches up to these goals.