Here we go again.
Oregon’s state universities will be raising their tuition again next school year.
Oregon’s Higher Education Coordinating Commission recently approved a resident undergraduate in-state tuition increase of 8.37 percent at Portland State University (PSU) for 2017-18, as well as increases at other Oregon state universities.
With the state’s fairly steady disinvestment in higher education over the years, it is commonly assumed that this has been the primary driver of tuition increases.
I even wrote an article a while ago blaming the Legislature for rising tuition at state universities. “Because of the Legislature’s calculated callousness or pure indifference in funding Oregon universities, young people across the state are facing soaring college loan debts and diminished opportunities for higher education,” I wrote.
But research indicates that declines in state support may not be the primary villain.
A Brookings Institute review of research on the disinvestment hypotheses revealed that a clear causal relationship between reductions in per-student state appropriations and increases in tuition has not been established. Moreover, there’s a “surprisingly thin” amount of research on the relationship.
Sure, higher education tuition has been rising as state support has been declining, but claims that changes in state appropriations are the biggest factor causing tuition increases are simplistic assertions based on nothing more than a comparison of two trends, a Brookings Institute paper said.
For example, in a recent article for FiveThirtyEight, Doug Webber, a professor at Temple University, put changes in tuition at public universities side-by-side with changes in state appropriations in a table, divided one column into the other, and then labeled the result, “share of tuition hike explained by cuts” [Emphasis added].
Brookings challenged this analysis. “..it does not explain how much of the funding cut caused the increase in tuition…Rather, it assumes that a causal relationship already exists, that it is dollar-for-dollar, and that no other factor could explain the changes in tuition,” Brookings said.
A study by the U.S. Department of Education’s National Center for Education Statistics found that changes in appropriations account for only between 19 percent and 28 percent of changes in published in-state tuition prices.
Another study published in a National Bureau of Economic Research volume examined a dozen factors that might be associated with changes in tuition, including changes in appropriations from state governments. This study, by Michael Rizzo and Ronald G. Ehrenberg, looked at these changes for 98 universities over a 10-year period.
The paper includes an important finding on the magnitude of the effect of a reduction in state appropriations on tuition. The effect, it concluded, is miniscule. The authors found that, “for the average institution in our sample, it would take an increase of $1,000 in state appropriations per student to generate an in-state tuition reduction of only $60.” That means six cents of every dollar in appropriations find their way into lower tuition.
A George Washington University study also has found that changes in appropriations have a very small effect on tuition at public universities. This study found that just ten cents of every dollar increase in appropriations would find their way into lower tuition, an effect similar in magnitude to what Rizzo and Ehrenberg found.
“If the relationship between state appropriations and tuition at public universities is as weak as the two studies show, the ubiquitous claim that cuts to state funding are the “primary driver” of changes in tuition are simply not supported by the research,” the Brookings Institute reported.
Equally, the research suggests that increased appropriations for public universities are unlikely to have an effect as large as advocates assume. “That makes increasing appropriations for public colleges and universities an ineffective—even wasteful—policy for keeping tuition low,” Brookings said. “It also implies that grant aid might deliver more bang for the buck than larger state appropriations.”
So why such an apparently weak link between appropriatio0ns and tuition? Brookings speculates that universities may be simply looking to exploit their pricing power in the market, leading them to raise tuition whether appropriations rise or fall.