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US public colleges now get more revenue from students than from state funding

A student in flip flops and shorts (C) watches as U.S. President Barack Obama (not pictured) receives an honorary degree during the spring commencement ceremony at Ohio State University in Columbus, May 5, 2013. REUTERS/Jason Reed (UNITED STATES - Tags: POLITICS EDUCATION SOCIETY TPX IMAGES OF THE DAY) - RTXZBLI
Reuters/Jason Reed
Revenue in, degree out.
By Zach Wener-Fligner
Published Last updated This article is more than 2 years old.

Thanks to state and federal grants, public colleges and universities have historically been the most economical way to get a good education in the United States.

But little by little, through funding cutbacks and tuition hikes, these institutions have shifted their financial dependencies, relying less on state coffers and more on students (or their parents). According to a new study by the US Government Accountability Office, such schools now receive a greater portion of revenues from student tuition than from state funding.

The study looked at the total breakdown of college revenues from 2003 to 2012. In 2003 state funding accounted for 32% of total revenues, while student tuition supplied just 17%. By 2012, the tables had turned: students paid for 25% of total revenue, while states funded 23%. The additional revenue comes from federal grants and other sources, including private gifts and grants, and auxiliary revenue streams, like hospitals and football games.

Here’s the total percentage breakdown of revenue:

The increase in tuition revenue seems—logically—to have come from an increase in tuition. In 2012 dollars, the average net cost to students—a value that measures what students actually pay, after all expenses and financial aid—rose 19% from $1,874 in 2003 to $2,226 in 2012. (This might not seem like a big dollar amount increase compared to astronomical oft-quoted tuition numbers, but keep in mind that we’re looking at all public schools, including community colleges, which are generally much cheaper.)

The good news is that since 2012, state funding seems to have increased somewhat. But that’s no big surprise: most states’ economies are finally starting to bounce back from the recession, and can roll back the drastic budget cuts they made during the down years.

Still, in real dollars, state funding is  less than it was before the recession. And if history is any indicator, we shouldn’t expect these trends to change—funding has been falling, and tuitions rising, for the past 25 years.

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