Can the Next President Actually Save Public Universities?

The crisis of college affordability may not be solvable by the federal government: It has had much less control over tuition than state policies.

Students walk on the University of California Los Angeles campus. (Lucy Nicholson / Reuters)

The nap pods that popped up recently at the University of California, Berkeley, may be exacerbating a problem they were designed to fix. Intended to help relieve student stress, the egg-like pods cost approximately $100,000 total. A significant student stressor at Cal is rising tuition, and while the pods add up to about $3 per student, paid for in student health fees, the symbolism is galling to students who will graduate with as much debt as the pods cost.

As the editors of The Daily Cal, the university’s student paper, wrote, students aren’t sleep-deprived because of lack of beds but “because of the overwhelming pressures they face.” More naps do nothing for mounting student fees, and the pods appear to ignore deeper structural reasons for student stress: The average Berkeley student leaves the school more than $17,000 in debt (the national average is $29,000, for public and private colleges).

The two Democratic presidential candidates have responded to the student-debt crisis with plans for “free” or “debt-free” college. But it’s not clear how much the federal government can do about the underlying factors driving the rise in tuition, which is largely under control of the states. “There is not a lot of mystery about how [public colleges] are funded,” says Chris Hoene, the executive director of the California Budget and Policy Center. “They have two major funds: what the state can provide and tuition and fees. If one goes down, one goes up.”

For more than three decades, state funding for most public universities, including the University of California, has been going down while tuition and fees for students have been going up. (Notable exceptions are the oil-rich states of Alaska and North Dakota, although that trend is changing this year with the decline of oil prices.) The UC system’s tight budget is emblematic of a larger decades-long trajectory in American higher education. According to the D.C.-based Center on Budget and Policy Priorities (CBPP), state and local governments paid three times as much as students to fund public colleges and universities in 1988; in 2015, funding was about evenly split between the two. States are spending 20 percent less per student today than in 2007, and college costs have grown faster than the median income over the past two decades. The necessity of a college degree, combined with its increasing unaffordability, has helped to fracture the concept of upward mobility and equal access to opportunity—those hallmarks of the mythical American Dream.

That crisis of affordability has become a key plank in the campaigns of the two Democratic candidates. Bernie Sanders plans to push the cost issue to the federal government by eliminating tuition at public colleges and universities, by cutting student-loan interest rates, and increasing federal funding of state colleges, all paid for by a proposed tax on Wall Street speculation fees. Sanders also calls for state schools to reign in costs in order to get their federal money, through a moratorium on merit-based aid and non-academic buildings (such as increasingly lavish student centers). On his website, Sanders cites the historically low tuition the University of California and the City University of New York as proof that free college can work in the United States. But these examples come from an era when states had fewer revenue restrictions—that is, tax caps and budget mandates. Like the University of California, CUNY has been increasing the share of the budget paid by tuition, rather than the state and city, over decades; New York state kicked in more than two-thirds of CUNY’s budget in 1988, while it contributes less than half today. (Even in the mid-century at CUNY, some tuition came from “outsiders”—or night students and nonmatriculants, who helped the bottom line, much as out-of-state students do today.)

Likewise, Hillary Clinton’s plan calls for free community college, as well as no loans for low-income students, lower interest rates on student loans in general, and income-based repayment. In addition, her plan nods to the need to address state “disinvestment” in higher education by providing grants to states that guarantee loan-free four-year college and free community college, funded by closing tax loopholes. In Clinton’s plan, the federal government would give money to state colleges based on the number of low-and-middle income students they enroll and reductions in debt created by covering living expenses.

Yet, to date, the federal government has had much less control over college tuition than state policies. The federal government funds state universities indirectly, through research grants to faculty, Pell grants for low-income students, and through some student loans that it backs and subsidizes. Direct funding for public colleges and universities comes from the states, and state and local funding cuts are largely due to looming outside constraints, such as tax caps and mandatory expenditures like public K-12 education and health care. Until the problem of reduced revenue is tackled, many experts say, tuition will continue to rise, no matter who is subsidizing it. “The Pell Grant plays a large role in helping low-income students afford college, but revenue is overwhelmingly state budget appropriation,” says Michael Mitchell, a senior policy analyst of state fiscal policy at the CBPP. “State funding is the big game.” As a Pew Charitable Trusts report put it last year put it, in higher education, the federal government funds individuals, while the states fund institutions.

Take California. In the 1950s and 60s, tuition was free for in-state UC students. In 1978, voters passed Proposition 13, limiting property-tax increases to under 2 percent, and squeezing overall revenue for California’s general fund. Tuition at both UC and CSU has tripled, and not, say scholars, because of large spending increases but because of decreased state funding for even more students: Between 2007 and 2013, $2 billion was cut from the state’s higher-education budget, as 32,000 more students enrolled at the University of California alone in the same time period. “Higher ed, corrections, and the social safety net are the places where there aren’t protective mandates or requirements in place,” says Hoene. “The corrections budget has gone up, health care has gone up, and higher ed has gone down.”

California is not an anomaly. State spending on higher education has plummeted to the point that some researchers suggest it may soon reach zero in states such as Colorado or Louisiana, as tax policies change. Overall, between 2003 and 2012, state funding for all public colleges decreased by 12 percent, according to the Government Accountability Office, while tuition rose by 55 percent; tuition surpassed state funding as the major revenue source for public colleges for the first time in 2012.

The University of California has come up with a grant model that it says maintains access for low-income students, with Berkeley ensuring tuition-free attendance for students whose families make under $80,000. At the same time, the university is raising tuition and eliminating grants for out-of-state students in response to a budget crisis. Among those in the $100,000 debt club is Virgie Hoban, a senior and former editor at The Daily Cal, who is something of an endangered species at Berkeley—a low-income out-of-state student. This academic year, the university eliminated aid for non-resident students, as one response to the budget and enrollment trends. “I feel lucky to have been a student in better times,” Hoban says, citing the new out-of-state aid policy. Still, “I will be in debt half my life.”

Grants for low-income students are helping to drive the increase in federal funding for all higher education, which matched state spending for the first time in 2013 (excluding loan programs), largely because of an increase in Pell Grants. Yet a high price still looks high, no matter how many grants a student is awarded later—or loses over time. A $50,000 price tag starts to make a year of college look like a luxury item. A 2015 study found that published tuition increases at non-selective public four-year institutions can decrease diversity. Moreover, says the California Budget and Policy Center’s Hoene, “even if you provide grants and scholarships, if the state has disinvested over time, the calculus doesn’t work because the out-of-state and international students are still a better deal financially.” In fact, the proportion of out-of-state undergraduates at UC has tripled over the last eight years, at the expense of Californians, claims a recent state audit.

To really solve the tuition crunch, tax oil (via an oil-severance tax), tax marijuana, and fix Prop 13, says Kevin Sabo, a senior at Berkeley, the president of the University of California Student Association, and a community-college transfer himself. “The revenue pipeline is not big enough; our state is too hamstrung to service the needs of 40 million,” he says.

As a recent New America report by Ben Barrett puts it, federal aid for students is, essentially, a voucher system, “backfilling” broken state budgets; instead, writes Barrett, “states must be reinstituted as a primary partner in financing higher education.” Presidential-campaign platforms don’t usually have room for the workaday complexities of state tax policy. But, as Sabo points out, there may be no better way to lower tuition than to focus on just that.