NEW YORK (MainStreet) — Some hoped that an end to the Great Recession would lead to increased revenue for state governments, resulting in a spending hike for higher education — and lower out-of-pocket costs for many students attending public universities. But if what’s happening in California is evidence of a trend, the future will continue to be expensive.
Last week the University of California’s Board of Regents took the wraps off plans to raise tuition by nearly 27% in 5% yearly increments through 2019 that will affect some 245,000 students across ten state campuses, pitting the system’s president, Janet Napolitano, who stands behind the plan against California Governor Jerry Brown.
Tuition freezes were one of the planks in Browns platform when he won an unprecedented fourth term as governor just weeks ago. He pledged to find more money for the state university if the tuition freeze was left in place. Now those bets may be off.
Students and politicians who sit on the Board of Regents argue that higher fees won’t solve the system’s long-term problems and will hurt students. They also accuse Napolitano and the Regents of holding students as hostages in a fight with Brown, who is himself on the Board, over the state budget battle. Napolitano has promised to admit more Californians and keep their tuition lower if state lawmakers will give the system hundreds of millions more dollars.
One of the casualties in this university of lowered expectations could be Cal grants, the state’s tuition subsidy for low-income students, a group with an average income below $21,000 for a family of three. By 2013, the state spent about $773 million on Cal Grants for UC students alone -- up from $339 million in 2008, according to preliminary figures on the university's website. The governor has yet to propose Cal Grant funding for next year's budget.
The grants are competitive. There are just 22,500 grants made annually—enough to fund roughly one out of every 16 applicants.
“Technically, the Cal Grants are supposed to be tied to the system-wide fees,” said Mark Kantrowitz, vice president and publisher of Edvisors.com. “But there may be a bit of a political battle shaping up since the schools increased tuition against the governor’s wishes. Already there’s an indication that the independent colleges may experience cuts in the Cal Grants, among the most generous in state aid programs.”
The state colleges often offer merit-based or non-need-based aid to wealthier students as a recruiting tool, yielding minimal revenue gains while tuition revenue takes a hit.
”It is not uncommon for public colleges to go through a feast or famine cycle,” Kantrowitz said. “Toward the end of an economic downturn and for a few years afterward, state tax revenue is down. Since states have to balance their budgets, they must cut spending. One of the first places they cut is support of post-secondary education. This forces the colleges to raise tuition revenue, either by increasing tuition rates or by shifting enrollment to out-of-state and international students--who pay higher out-of-state tuition rates.”The Institute for College Access and Success (TICAS), 73,000 students will receive money in 2014-15, fewer than half of the and expected 156,000 applicants. The California Student Aid Commission said $60 million was awarded in 2014-15, meaning $47 million from a budgeted $107 million will remain unspent. TICAS proposed shifting unspent Middle Class Scholarship money to Cal grants.
--Written by John Sandman for MainStreet