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    Chapter 1: Five National Trends

    Chapter 2: State Policies for Affordable Higher Education

    Chapter 3: Questions and Answers about Losing Ground

    Chapter 4: 2002 Update for the States: "A Dire Situation"

    Chapter 5: Public Concerns about the Price of College

    Chapter 6: Taking Care of the Middle Class

    Chapter 7: Profiles of American College Students

    Appendix: State Trends




    The passage of the G.I. bill after World War II opened higher education to hundreds of thousands of American families who previously had no direct experience with education beyond high school. For the first time in history, the children of people with average financial means-the sons and daughters of farmers and repairmen-could get a college degree or could complete vocational training. In one generation, higher education in America was being transformed from an organization for the few to a core institution of democracy, as well as economic progress. And ever since, Americans have understood that making college affordable is a key that opens the door to college opportunity.

    In a world now shaped by information technologies and global economies, college opportunity is even more important today than it was just a decade ago. Education and training beyond high school is no longer discretionary for those who aspire to full social and economic participation in American life. Public understanding of this reality is reflected in public opinion surveys, broader college aspirations, and increased college attendance. Across the country and within states, however, Americans' opportunities for higher education remain unevenly and often unfairly distributed, and fail to reflect the distribution of talent in American society.1 Family and personal financial resources still play far too great a role-even among those who are well prepared-in determining college opportunity.

    Within this context, Losing Ground, a special report from the National Center for Public Policy and Higher Education, examines the affordability of higher education in America today. Although Losing Ground takes a nationwide look at affordability, its policy implications primarily affect the states. This report includes information on both public and private higher education, but its emphasis is on public colleges and universities. As we write, the nation appears to be recovering from recession, yet many states are facing financial problems that have grave implications for public policy; these fiscal and policy challenges directly influence the affordability of public colleges and universities.

    Our principal basis for assessing the affordability of a college education is to examine tuition and the other costs of attending college, in relation to family income. We believe that this perspective-that is, comparing tuition and other costs to income-best captures the reality of what it means to pay for college. Based on this analysis, Losing Ground finds that most families today, compared to those 20 years ago, must devote a larger share of their income to pay for college. This finding is, unfortunately, ironic: Just as college opportunity has become indispensable, it also has become less affordable.

    Chapter 1 begins with this fundamental finding and describes four additional trends that, if they are allowed to remain unchecked, will have adverse consequences for broad college opportunity in America:

    1. Increases in tuition have made colleges and universities less affordable for most American families.
    2. Federal and state financial aid to students has not kept pace with increases in tuition.
    3. More students and families at all income levels are borrowing more money than ever before to pay for college.
    4. The steepest increases in public college and university tuition have been imposed during times of greatest economic hardship.
    5. State financial support of public higher education has increased, but tuition has increased more.
    In "State Policies for Affordable Higher Education" (chapter 2), we discuss several implications of these five trends for state policy. There is no single policy that can assure affordable public higher education in all 50 states, yet much can be learned from those states that have performed well in this area. For instance, every state can and should have its own strategy to enhance college affordability through public college tuition and student financial aid. Every state can consider family income levels in the state when establishing or approving tuition policies. Every state can assure that adequate student financial aid is provided to the neediest students, particularly when tuition is increased. Every state can ask:
    • How much should families of various incomes be expected to contribute to tuition and college-related expenses?
    • How much debt should be encouraged?
    • How should student financial assistance be provided, and to whom?
    Underlying these questions is an even more fundamental one: How much encouragement and incentive does each state wish to give its citizenry and workforce to raise their knowledge and skills beyond the high school level? Higher education resources vary widely among the states, and so do their histories, economies, demographics, and politics. A "one size fits all" approach is impractical-and this underscores the need for each state to develop its own policies for affordability.

    State financial support for higher education, as measured in the aggregate, has increased over the past 20 years. In 1981, states appropriated $23 billion for higher education, $40 billion in 1991, and $64 billion in 2001.2 These national summaries do not account for state variations, which are quite significant, nor do they reveal whether past or current levels of state support for higher education are adequate. State-by-state information to assist in comparing state trends with national trends can be found in the appendix to Losing Ground.

    The nationwide trend of increased state appropriations to higher education masks an important state responsibility for the erosion of affordability. In order to help balance their budgets during recessions, states often reduce their appropriations to higher education disproportionately, compared to other state spending categories. Chapter 4, "2002 Update for the States," describes the series of budget cutbacks that currently are unfolding in several states. During periods of economic growth, on the other hand, states often increase their appropriations to higher education. These increased appropriations drive up the costs of college for taxpayers, although not always with commensurate improvements in access or educational effectiveness. During upswings and downturns in the economy, continued public investment in higher education is needed. But even in the best of times, emphasis should be placed on expenditures that are cost-effective, that improve educational outcomes, and that can be sustained in both high- and low-water years.

    In chapter 5, Losing Ground turns to the most recent public opinion research in order to examine Americans' opinions about the affordability of higher education. For most Americans, college has become an integral part of the American dream, and the issue of affordability continues to concern them. Americans also express skepticism that colleges and universities are doing all that they might to control costs.

    The fundamental findings within the covers of this report serve to endorse and reinforce the concerns of many state and higher education leaders regarding the importance of need-based student financial assistance. Over the past decade, the nation and many states have turned their policy attention to the politically influential middle-income families who have felt the financial "squeeze" of increased college tuition-those families with children most likely to enroll in college. The impressive and expensive array of programs that have been created or enhanced as a result are described in chapter 6, "Taking Care of the Middle Class." The creation and enhancement of these programs, and the public expenditures that support them, suggest that this agenda has been largely completed. College opportunity for low-income Americans, for whom affordability continues to be an impediment to college attendance and completion, remains the major unfinished national and state agenda.

    In chapter 7, "Profiles of American College Students," the National Center offers a look at six students and the challenges they face in paying for college. These six stories, written by journalists, also illustrate the diversity of American college students today.

    The National Center has benefited greatly from the guidance of an advisory committee and of reviewers and consultants who contributed to the development of Losing Ground. We also have learned and drawn from the work of others, particularly from recent reports that have explored aspects of the affordability of college (see sidebar, page 31). The information in this report is in the public domain; it is available to those who may wish to pursue further analysis or to verify its accuracy. The National Center, however, takes full responsibility for the interpretations, findings and conclusions of Losing Ground.

    1 National Center for Public Policy and Higher Education, Measuring Up 2000: The State-by-State Report Card for Higher Education (San Jose, CA: 2000).

    2 National Association of State Universities and Land-Grant Colleges, Appropriations of State Tax Funds for Operating Expenses of Higher Education 1981-82 (Normal, IL: Illinois State University), p. 6; Center for Higher Education and Finance, Grapevine: A National Database of Tax Support for Higher Education (Normal, IL: Illinois State University): (March 25, 2002); Bureau of Labor Statistics, Consumer Price Index 1981, 1991 and 2001 (Washington, D.C.: U.S. Department of Labor): (March 25, 2002).

    3 Anthony P. Carnevale and Richard A. Fry, The Economic and Demographic Roots of Education and Training (Washington, D.C.: The National Association of Manufacturers, 2001), p. 3.

    4 David T. Ellwood and Thomas J. Kane, "Who Is Getting a College Education? Family Background and the Growing Gaps in Enrollment," in Sheldon Danziger and Jane Waldfogel, editors, Securing the Future: Investing in Children from Birth to College (New York: The Russell Sage Foundation, 2000).