Paying for Higher Education: Part 3

Part 2

Budget Cuts and Students

As cuts in state funding for higher education climb, more and more financial responsibility has been placed on colleges’/universities’ second biggest source of income: students and their families. With tuition prices on the rise, the true accessibility of higher education has come into question and causes concern for our economic future.

What About Financial Aid?

Financial aid for students comes from the Federal Government with the potential for other grants/scholarship money from the individual states. Financial aid has risen despite cuts at the state level however, it has not done so at the same average rate as tuition, placing greater financial stress on its benefactors.

How much of tuition financial aid is able to cover varies from state to state. As a Federal entity, the amount of financial aid a student can receive is the same no matter what state they decide to attend school in. This means students pursuing an education in states with greater budget cuts in higher education, and by extension greater tuition hiks, are responsible for a greater amount of their tuition (negating opportunities offered by individual State). This is particularly true in states that have continued budget cuts to higher education into the current economic recovery.


No matter how much of tuition financial aid is able to cover, it provides significant financial relief for the students who qualify. However, student qualification has become a severe issue as tuition and living costs have rapidly climbed. Financial aid is given based on level of need as determined by a given formula, the goal being that the most aid will go to the most needy. It follows that students coming from middle class households who have not declared financial independence qualify for significantly less aid if they qualify at all. This has become problematic as the cost of higher education has risen well beyond the means of many middle class families, necessitating a growing number student loans to be issued in order for middle class students to attend college. It should also be noted that financial aid primarily covers tuition costs and does not fully account for the growing cost of room and board, contributing further to the overall growth in student loans. This trend will likely grow as cuts to financial aid have become part of the Federal budget plan. Where financial aid has been able to relieve some of the growing financial pressure for many students, it has ultimately failed to provide effective relief and does not eliminate the growing problem of affordability.

What About Student Loans?

With the primary financial burden of running higher education institutions shifting from the State and onto students and their families, the demand for student loans has dramatically increased. Presently, students collectively owe more in student loans than they do in car loans or credit card debt. This level of debt students have become responsible for has severe economic implications.

Unsurprisingly, the high, long-term financial burden of student loans has deterred many students from attending college or from pursuing more competitive programs. The threat of decreasing enrollment at a time where the demand for college-educated workers is growing is a cause for concern. “The Georgetown Center of Education and the Workforce projects that by 2020, 65% of all jobs will require at least some college education.” (Mitchell, Palacios and Leachman, 2014). If current trends continue, colleges will be producing 5 million less workers than what will be demanded. In order to adjust to the shortage, businesses will likely begin bringing in educated labor from elsewhere. This also implies that many more Americans will find it challenging to find decent employment opportunities as they struggle to acquire the education they need.


The long-term challenge of paying off student loans affects the willingness of young workers to spend or invest in other economic sectors. Since many young workers have to set aside a portion of their income to apply towards their student loans, they are generally more frugal in their spending. Young workers are also less likely to invest in homes or other large endeavors as they are unwilling to and/or cannot acquire additional debt. This in particular has become problematic to the economy since student loans can look and freeze this spending for many years.

Accessibility is Driving Inequality

Unsurprisingly, recent budget cuts and tuition hikes have hit low-income students harder than their middle and upper class counterparts. For many of these students, access to higher education is a ticket out of poverty. Diminished accessibility to quality programs due to rising costs traps these students as they struggle to find a way to afford the opportunity for success.

Students coming from low-income families are often able to qualify for significant financial aid. As previously discussed, Federal aid is often not enough to fully cover tuition and on average, the amount of aid provided by individual states is dropping. Even if students are able to get their tuition completely covered, they are still financially responsible to some degree for room and board. Room and board costs are also rising dramatically, making them unaffordable to families already struggling to cover their basic living needs. Many students and their families are then forced to seek additional financial input, and that often comes in the form of student loans.


Because low-income students start with a greater need, the amount they require in student loans is often higher than their middle-class counterparts who likewise receive aid and/or require loans to pay for their education. Where these loans can initially open opportunities for students, they often come with high interest rates and can haunt students long after they have entered the workforce. For students already struggling financially, the thought of starting their future with debt is scary and can be a deterrent for many college hopefuls. As a result, low-income students will often seek out less competitive programs in order to save money, even if their academic performance is extremely high. Studies have shown that success in more competitive programs leads to better opportunities than less competitive programs, particularly for low-income students. Every time an intellectually competitive student chooses a program beneath their capable level of performance, they potentially sacrifice some of their future economic productivity. For those who avoid four-year programs or higher education in general due to price, the future continues to look bleak.


Despite the growing question of affordability, there are many avenues in which low-income students can have their education paid for. However, many of these students struggle to find/access these avenues. There is a higher likelihood of low-income students being the first in their family to attend college and/or that they are either first generation Americans or immigrants themselves. For these groups, the process of finding and applying for grants, including Federal financial aid, is difficult to navigate and many times, the parents are unable to help their students take advantage of these opportunities. Where many schools have programs to help students acquire funding, the quality of these programs vary from school to school and there is no guarantee that students in need will receive the proper help. However, if students are able to find the resources, college can still remain a part of their future.


The last three posts have focused on the economics of public higher education and how recent activity has affected various entities within these institutions. Though I have approached the topic in a rather critical way, I fully acknowledge that there are many things about this system that work and many more that used to work in the past. The difficulties we face today will help determine how higher education will continue to evolve in order to meet growing demand.

As an educator, I don’t usually find myself thinking about higher education beyond helping my students get there and using it for my own intellectual advancement. I have the feeling that is probably true for many other educators as well. However, through the process of analyzing this topic, I realized that it is just as important for us to be informed in how higher education works as it is our own system. In order to push students towards future success, we must have an understanding of what kind of future we are pushing them towards.


“Budget Cuts and Educational Quality.” Budget Cuts and Educational Quality. N.p., n.d. Web. 21 Jan. 2015. <;.
“Center on Budget and Policy Priorities.” States Are Still Funding Higher Education Below Pre-Recession Levels —. N.p., n.d. Web. 17 Jan. 2015. <;.
Julia O’Donoghue, | The Times-Picayune. “Louisiana Higher Education Officials Say Campus Closures Are a Possibility.” N.p., n.d. Web. 20 Jan. 2015. <;.
“State Funding: A Race to the Bottom.” State Funding: A Race to the Bottom. N.p., n.d. Web. 20 Jan. 2015. <;.

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