Академический Документы
Профессиональный Документы
Культура Документы
Alexandra Kadell
Cameron Beatty
EDU 723: History of Higher Education
May 7, 2017
Financing Higher Education Kadell 2
Introduction
During the 2016 Democratic primary, political candidate Bernie Sanders sparked a
nationwide conversation revolving around tuition and a debt free higher education. Gaining
popular support by thousands of students across the country, the idea of a tuition and debt free
nation has been provoked by the rising cost, lifelong debt, and unequal accessibility into higher
education institutions. While tuition continues to rise for students, states are allocating less
funding for higher education. From 2008 through 2011 43 states cut their funding for higher
education (Klein, web, 2015). If the country continues to prioritize funding elsewhere, how
could a tuition and debt free higher education prosper in our society. The complexities of funding
higher education have evolved into our current economic and political structure.
In addition, the United States historical development over time has shifted its emphasis
critical that the history of higher education’s financing is explored. Beginning with the early
development of financing in the progressive era, to the impact of the great wars, and policies
made within the twenty and twenty-first centuries a historical context of financing will be
demonstrated. Furthermore, an analysis of three states, Massachusetts, Texas, and Utah as well
as the political climate we are engaged in ultimately will provide evidence to see if tuition or
that an explanation of funding is articulated. The focus of the historical context will be centered
on the policies and data results within the progressive era, great wars, twentieth and twenty-first
century time frames. Note that the colonial era finances are not discussed within the paper due to
Financing Higher Education Kadell 3
the lack of resources and the complex governing issues, the divide between the colonies and
Great Britain, which has influenced our current understanding of funding for higher education.
Funding can incorporate many different avenues as well as be related to public or private
institutions. Large endowments, wealthy alumni, tax revenues or legislative votes and resources
are examples of revenues that influence an institutions financing (Yeager, Glenn, Potter,
Weidman, & Zullo, 2001). Additionally, funding can come from agencies that allocate money to
and work stations” (Cohen, 2007, p. 388). The government’s role in funding is generated through
either state legislatures who allocate money for initiatives or the federal government who provide
money for specific projects, but withdraw the funds when no longer needed (Cohen, 2007).
Overall funding in the context of this paper is loosely defined and incorporates a variety of
factors.
Progressive Era
The first establishments of higher education institutions were primarily focused on the
education of white, elite males. As institutions began to incorporate greater access, institutions
with specific specialties including grant institutions in 1862 and normal schools in 1860 began to
evolve. These types of institutions primarily focused on occupational education (Thelin, 2004).
As a result, funding policies began to be established to promote the success of the newly
established institution’s. The Hatcher Act of 1887 provided federal money to assist agricultural
college and expand their resources for agricultural research (Cohen, 2007). Over twenty-five
years later the Smith-Lever Act of 1914 was created by the federal government which allocated
funding to support home and agricultural economic program’s (Cohen, 2007). Also, established
by the federal government was the Smith-Hughes Act of 1917 which provided a source of
Financing Higher Education Kadell 4
income to train vocational educational teachers (Thelin, 2004). Although, the policies were
specific towards occupational support, the progressive era started the financial aid trend that the
of higher education. In 1914, the first World War throughout Europe began with the United
States joining in 1917. Twenty years after in 1939 the second World War broke out and the
United States involvement began after the attack on Pearl Harbor in 1941. Both World Wars had
devastating impact on the survival of higher education institutions. Major implications such as
tightening budget expenditures, course offering slashes, and under staffing were seen throughout
both wars (Impact of the War on Higher Education, web). Focusing on aiding money into the
war capital investments were halted or cut causing material shortages and the restructuring of
After the first war the United States economy severely crashed causing the great
depression to ripple throughout the nation. Therefore, financial assistance for institutions from
the government were depleted. Financial support such as “foundational grants declined from 52
million in 1930 to 40 million in 1940” (Cohen, 2007, p. 164). The lack of students also caused
financial tensions to arise throughout institutions. Soldiers that were volunteering or being
drafted into the war were primarily within the age of attending college. Enrollment between 1939
– 1940 declined 78.7 percent causing institutional income to drop from 16 million to 12.7 million
1,728 thousand institutions were associated with the United States office of education in
1944. Within a three-year period 133 of the institutions on the list disappeared (Impact of the
War on Higher Education, web, p. 214). Although the wars produced financial hardships for
Financing Higher Education Kadell 5
many colleges and universities some institutions were able to survive. Typically, these
institutions consisted of highly endowed structures which produced war efforts. In the context of
Williams College, a large endowed private liberals arts school in Western Massachusetts “. . .
actually kept educational costs down. The national inflation rate in that decade was seventy-three
percent. . . far higher than the colleges 57 percent increase” (Thelin, 2004, p. 293). Additionally,
institutions with scientific focused explorations were allotted federal appropriations for war
related research and personal training for officers after the start of World War II (Cohen, 2007).
Institutions that were able to excel throughout the World Wars were results of specific financial
After the conclusion of the second World War, institutions of higher learning grew to
popular demand. Men returning from the war now had opportunities to participate in education
due to the institutional and governmental policies. For example, military contracts granted
institutions civilian tuition money (Impact of the War on Higher Education, web). Therefore,
allowing access for veterans to receive an education. Most importantly, the establishment of the
GI bill in 1944 provided veterans an affordable option to attend a college. The bill not only
created access for individuals returning from the war, but state aid also fostered the economic
growth of institutions due to the increase of student enrollment (Thelin, 2004). Throughout the
World Wars institutions were grappled by the lack of economic assistants. Institutions that
prospered experienced new financial assistants from the government. This switch helped foster
new attitudes towards access and aid for higher education. Truman’s 1947 commissions report
showcased the necessary shift the government needed to take in order to produce affordable
Twentieth - Century
Although the executive branch placed emphasis on making higher education affordable
after the great wars the process of doing so became complexed and little implementation was
done directly after. The technological advancements to gear institutions to a new level of
management had not been created. In fact, by 1967 institutions were still using simple bank
checking accounts with a pen and notebook to manage their budgets (Thelin, 2004). In addition,
during the twentieth-century financial aid abuse by both students and the institution, cost of
education increased, and student national debt escalated (Thelin, 2004). The tuition gap between
four year private and public schools as well as colleges dramatically increased tuition causing
inflation to rise and student debt to take new meaning (Thelin, 2004). Lastly, in 1970 the
National Student Marketing Corporations stock fell from 140 dollars a share to seven dollars
(Thelin, 2004). As a result of the alarming financial situations that were beginning to occur
within higher education the government began to implement new initiatives to help stimulate
The total higher education funds between 1969 – 1970 was 21. 5 trillion dollars (Thelin,
2004). Significant initiatives that aided in institutional and student benefits are programs that are
still active today. For example, in 1970 the federal government developed and implemented
work study programs and competitive research grants to financially aid students throughout their
college experience (Thelin, 2004). Another initiative was the 1964 Higher Education Act, which
was created to help establish financial support by the government. Throughout the century, the
act was amended twice. Both amendments happened in 1972, the first was the establishment of
higher education coordinating agencies whose purpose was to bridge the gap between institutions
and the federal government. While providing some federal financial support, the states would
remain a key component in the financial support for institutions (Thelin, 2004). As well, the Pell
Financing Higher Education Kadell 7
Grant amendment was added to the act in order to provide students educational opportunities. In
the 1990’s “. . . the program served about 3 million students, with awards totaling $4 billion, per
year ($5.2 billion in 2000 dollars). In 1997-98 the figure has increased to 3.8 million students,
with total funding of $3.8 billion ($4 billion in 2000 dollars)” (Thelin, 2004, p. 325). What was
unique about the Pell Grant incentives is that it is awarded to the individual student not the
institutions. Therefore, if students meet the requirements they can choose which institution they
Even though the state and federal governments were passing legislation that boosted
higher education funding and the pressures to limit tuition from rising, it was still critical that
institutions restructure their process of accumulating funding. Therefore, new efforts such as
fundraising and grant acquisition were established at institutions to increase their endowments
and overall budgets (Thelin, 2004). Furthermore, some institutions began to privatize as well as
readjust their admission standards to generate revenue (Thelin, 2004). The governments
emphasis on helping students financially forced institutions to consider new and creative ways to
manage their budgets. These newly formed concepts have expanded further and has become an
our current structure of funding higher education. Taking aspects of funding from the twentieth-
century and expanded the policies or initiatives has provided some creative solutions for students
and institutions to gain financial support. However, the attention to new funding initiatives
within institutions and the increase of staff and administrative positions has produced both
beneficial and negative implications. The lingering federal and state budget cuts and student debt
continues to impact the financial situations of institutions and the students who attend. Overall,
Financing Higher Education Kadell 8
the political advocacy on behalf of higher education has evolved into a necessity for the daily
operations of institutions.
State funding for higher education was greater before the start of World War I then the
start of the twenty-first century. In 1914 state governments allocated 75 percent of the operating
budget compared to the 19 percent in 2001 (Thelin, 2004). Similar to the past experiences within
the United States history due to the trend of depleting funding resources new institutional
incentives were created to expand their budgets. For example, on campuses that have large
athletic presence the institution can have the authority to make the athletic association pay rent
on facilities that are university property. Additionally, institutions were able to charge the
athletic associations for using their logo or mascot (Thelin, 2004). Although a small incentive,
the profit that institutions produces through charging the athletic association provides a steady
institution through credit accrual and college completions, rather than the traditional funding of
institutions (Dougherty, Jones, Lahr, Natow, Pheatt & Reddy, 2016). However, performance
funding is not always fluid and can change due to the lack of enrollment, policy implementation,
and universities mission (Dougherty et al., 2016). Overall, the creation of performance funding
the governments lack of support and the rise of student debt, the restructuring and business
mentality of institutions has also negatively impacted funding. It is critical to recognize that the
institutions decisions directly influence tuition and funding. A larger emphasis on creating a
Financing Higher Education Kadell 9
meaningful experience for all students beyond the classroom has evolved into the various
support services and offices on campus. To support these services and provide student
the past two decades’ administrative positions nearly doubled faculty (Thelin, 2004). The
creation of new administrative positions led to salaries needing to be paid. As a result of the
Another constraint that institutions were participating in and sill are, is within the
“. . . financial aid offerings from need-based aid to merit scholarships, justified on the grounds
that colleges ought to be able to participate in the talent hunt for new students” (Thelin, 2004, p.
392). Through this process institutions are able to award full time scholarship opportunities to
students whose talents surpass their peers. However, in many situations the students being
awarded full time scholarships are already connected to wealthy families who can afford higher
education (Thelin, 2004). The substantial financial support is problematic because it reinforces
students with low socioeconomic statuses to continue in the trend of debt and unequal access to
education.
Although, individual institutions are partially responsible for the economic difficulties
many colleges and universities presidents blamed the state and federal government for their lack
of support in this issue (Thelin, 2004). Despite of these frustrations, throughout the twenty first
century several policies were enacted to assist higher education’s finances. In 2008, congress
passed the Ensuring Continued Access to student Loans Act which granted the United States
Department of Education the authority to buy and increase limits of unsubsidized Stafford loans
(FinAid, web, 2017). In 2009, the American Recovery and Reinvestment Act was established
Financing Higher Education Kadell 10
and “. . . provided 151 billion in flexible emergency funding to state governments between the
fiscal years 2009 and 2011” (Klein, web, 2015). In addition, the federal government was
engaging in grants competition which created new revenue streams for institutions operating
budgets (Thelin, 2004). Furthermore, the legislation of these acts was to aid in the financial
assistants for institutions throughout individual states and across the country. However, the
longevity and applicability of these political incentives were not secured for all institutions. With
the American Recovery and Reinvestment Act in 2012 the funds were depleted in turn creating
budget crises (Klein, web, 2015). As well the federal government competition grants were only
allocated to a small collection top federal research universities. Therefore, the access for a
variety of institutions was limited and involvement was risky as well as expensive (Thelin,
2004).
State Analysis
The historical context of the development of funding for higher education from the
progressive era to the early twenty first – century provides a foundation for understanding the
trends, complexities, and the emphasis of an affordable education our society instills as we
progress further. It is evident that the implementation of a variety of legislation can affect the
financial situations across institutional types, states, and nationally. Henceforth the importance of
analyzing the current policies and structures of funding higher education at three different states
and how it would influence institutions of higher learning. This section will dive deeper into the
higher education funding of Massachusetts, Texas and Utah in order to better understand the
current financing structures that are emplaced and if a tuition free higher education is obtainable.
Massachusetts is the largest educated population throughout the country. During the 2016
fiscal year, the department of higher education’s budget was 151,113,334 dollars with 8,097,235
dollars for federal grant spending (Mass.gov, web, 2016). However, throughout the decade
Financing Higher Education Kadell 11
public institutions have increasingly become more expensive. Between 2002 and 2013
approximately 335 million dollars of public support was cut by Massachusetts (Schuster &
Jones, 2015). Additionally, the state has also cut spending per student by 31 percent since 2001
(Schuster, web, 2016). The devastating cuts on funding has caused a trickledown effect to occur
throughout the state. Students who attend institutions within Massachusetts tend to stay in the
state. However, as a result of the financial cuts, tuition and fees for institutions has spiked. More
specifically, “student loans have increased from 54 percent in 2001 to 75 percent in 2014”
(Schuster, web, 2016). This relationship causes several implications on the greater economic
structure of Massachusetts. Although, graduating students are consumers within the society they
are not contributing their earnings because of the financial commitments they have towards their
loans. Lastly, in 2008 the Massachusetts legislature enacted a 2.2 million dollar capital
investment which allocated funds to modify current and launch new buildings on campuses
throughout the state. Even though the distribution of finances was established, Massachusetts
still ranks as one of the lowest states in capital investment (Schuster, web, 2016). Overall, even
though Massachusetts is the leading state in education and the benefits of having an educated
population are present, the financial assistance from the state is not reflective in supporting
higher learning.
By 2030 Texas aspires to have 60 percent of its residents earn a certificate or degree
(Texas Higher Education Data, web, 2017). With such a push for educating the population
funding is necessary in order to create the opportunity for Texans to attend college. Through the
60X30 Higher Education plan the state legislature allocated a 3.3 billion dollar grant to fund
crucial fields and aid low income students (Texas Higher Education Data, web, 2017).
Institutions throughout the state primarily obtain funding for infrastructure, student services,
Financing Higher Education Kadell 12
administration, employee benefits, capital equipment and special items through the state’s
legislative appropriations (Legislative Budget Board, 2013). During the fiscal year 2013, “$7.7
billion in General Revenue Funds and $1.3 billion in general Revenue-Dedicated Funds.
Including in this amount are an increase $392.5 million in General Revenue Funds and an
increase $56.2 million in statutory tuition in General Revenue-Dedicated Funds” were provided
to financially support higher education (Legislative Budget Board, 2013, p. 1). The revenue
funds provide essential funding for institutions and students to utilize. Additionally, to encourage
institutions to use funds from the revenues the General Appropriations Act (GAA) was
established for institutions to use at their discretion (Legislative Budget Board, 2013). Although,
Texas has created initiatives to assist funding cuts have been made. From the fiscal year 2014 –
2015 to the current year the total funding decreased by 1.0 million dollars (Legislative Budget
Board, 2013). Much like Massachusetts, Texas is creating legislative policies on funding higher
education. Although more emphasis could be placed on increasing funding from the state, it is
imperative that the efforts Texas has done and continues to do is acknowledged.
According to the national average Utah is 14 percent below, making the state the third
lowest tuition and fee systems. Utah legislatures give this success to the increase in state
appropriation funding that was implemented to support Utah Systems of Higher Education (Utah
System of Higher Education, web, 2016). However, analyzing deeper, institutions and students
attending the institutions are still routinely underfunded. Before the recession of 2008, the Utah
Systems were underfunded by 18.9 percent and continue to be ranked 9 percent below the
national average (Utah System of Higher Education, web, 2016). Similar to students within
Massachusetts and Texas, after the recession institutions began to increase tuition in order to
compensate for the lack of federal and state aid. In the case of students attending institutions in
Financing Higher Education Kadell 13
Utah tuition increased by 1,723 dollars for four year institutions (State Higher Education
Executive Officers Association, web, 2015). Along with institutional tuition raises the state has
cut over 1,200 dollars per student funding (State Higher Education Executive Officers
Association, web, 2015). As our economy has transitioned to a more stable situation the state
legislature still has yet to put more emphasis on funding higher education and the students
attending. Overall creating a divide that limits the access for students to attend institutions within
Utah as well as create financial strains on the institution. There is a clear disconnect between the
state legislature of Utah and the Utah University system. The discrepancies may be a result of the
state legislature only being able to see specific aspects of an institutions budget such as
appropriation bills (Utah State Legislature, 2015). The state legislatures who are the allocators
and policy makers for funding cannot fully comprehend the economic situations of institutions
by seeing the surface level. In order for the legislature to truly support funding initiatives
restructuring and transparency between the state and the Utah Higher Education system needs to
be implemented. Although, Utah system had evident flaws with prioritizing funding for higher
education, its situation is not completely unique. Throughout the country states are cutting
funding, institutions raising tuition, and overall leading to student debt escalating.
current state structures of funding the priority of funding for education is significantly decreasing
every year. Therefore, as our society is wrapped around the political idea of a tuition free higher
education, politicians, institutions, and individual students need to consider if the concept is
tangible. By comparing the potential benefits as well as disclosing the limitations provides a
The growing popularity surrounding a tuition free United States higher education system,
was not all due to Bernie Sanders political campaign. After years of tuition increases, state and
federal budget cuts, and a spike in student debt the opportunities for individuals to gain an
affordable education is no longer obtainable. Therefore, causing limited access for all to attend
institutions of higher learning. However, as a society, we have reaped the benefits of having
large educated population in our society. Having a highly-educated population fosters a society
that is productive, civically engaged and more democratic. (Schuster & Jones, 2015).
Nevertheless, the high-costing education reduces the accessibility for individuals to attend
college which ultimately infringes on the social benefits of education. As well the economic
increase that could occur by producing an affordable education is monumental to state and
national debt. Specifically, for Massachusetts, individuals who graduate from four year
institutions make about 21 thousand dollars more than those who obtained a two year or high
school degree (Schuster & Jones, 2015). As a result, higher incomes produce higher tax revenues
and consumer buying would increase by 2.81 billion dollars, ultimately encouraging a healthy
economy to develop. However, the rise of debt and commitment to pay them off restricts this
economic boost from occurring. Creating tuition free initiatives would provide access, produce
productive and educated members of our society, and overall stimulate the United States
economy.
Although creating a tuition free higher education could generate both social and
economic benefits it is essential that the logistics and implications of how its effects could
impact our society are addressed. If an initiative within Massachusetts was established to abolish
tuition and fees for in state students attending any institution type it would take approximately
631 million dollars a year (Schuster & Jones, 2015). In order for institutions to survive the
Financing Higher Education Kadell 15
money that would have been paid by students needs to be covered by the state. However, due to
economic restraints throughout the nation states have been increasingly cutting their budgets and
do not have the revenue for a massive expenditure such as the example in Massachusetts. A
solution that some politicians have advocated for is the reallocation of money from other
subsided programs. On July 24, 2014, the United States Senate debated on the issue of creating
an affordable education for students. The key points from this discussion were that senators
agreed that funding for higher education by states has decreased dramatically. About 30 percent
of an institution’s budgets are comprised of state aid while the other 70 percent is paid by the
student (Klein, web, 2015). However, the senate could not agree on how to provide financial
support in order to reduce student expenditures. The conversation geared towards reallocating
funds from other programs such as the Affordable Care Act. Programs, such as Medicaid helps
provide low income families and individuals with disabilities equal access to health care. If
legislation stripped money from programs such as the Affordable Care Act, many individuals
who utilize these services would be at risk (Klein, web, 2015). The economic balance, political
association, and logistics are heavily intertwined and critical to why our greater society has not
Despite potential setbacks, On April 11, 2017, the New York legislature passed The
Excelsior Scholarship which is a tuition- free degree program that will provide more than
940,000 middle class family in New York the opportunity to attend any CUNY or SUNY school
tuition free in the 2018 fiscal year (New York State, web, 2017). Within SUNY institutions, it is
estimated that over 80,000 students and close to 5,000 students in the CUNY system would
benefit from this program (Chen, 2017). In order to qualify for the program students must be
enrolled full time, be a current resident of New York, have a household income that is less than
Financing Higher Education Kadell 16
125,000 dollars, as well as live and work in New York State for however long the student is a
part of the program (New York State, web, 2017). However, if a student breaks the requirements
of the scholarship they are responsible for paying the money back. (Chen, 2017). During the
fiscal year of 2016, New York spent around 10.7 billion dollars on higher education and
collectively this scholarship would annually cost New York approximately 163 million dollars
(Seltzer, web, 2017). The Excelsior Scholarship will be implemented for the fall of 2017 and will
continue for three years, therefore the effects of this initiative will not be seen until the full cycle
is completed. Although, New York State is being criticized for the stipulations of the scholarship
New York is also being commended for its efforts in making college affordable and accessible to
its citizens.
Conclusion
Overall the history of funding higher education has been long and complex. Each
century brought new policies and has shaped the current funding structure of higher education
today. The Bernie Sanders movement brought light to the economic situations institutions and
students are experiencing throughout the nation. The positive social and economic outcomes
along with its limitations needs to be evaluated before longitudinal policies are enacted to create
a tuition free society. Generally, a greater financial emphasis needs to be instilled in order to
help lower the cost of education, but the total elimination of tuition may not generate the type of
outcomes that impact all who live in our nation. As student affairs practitioners, it is essential
that we have a foundational knowledge of the history of funding for higher education and the
current shifts that are effecting our campus communities and individual students.
Financing Higher Education Kadell 17
Reference Page
Chen, D.W. (2017). New York’s free-tuition program will help traditional, but not typical, students. The
free-tuition-program-will-help-traditional-but-not-typical-students.html
Cohen, A. M. (2007). The shaping of American higher education: Emergence and growth of the
Dougherty, K. J., Jones, S. M., Lahr, H., Natow, R. S., Pheatt, L., & Reddy, V. (2016). Performance
http://www.finaid.org/educators/history.phtml
Impact of the war. Higher Education Colleges and Universities in World War II. Retrieved from
https://www.depts.ttu.edu/education/our-
people/Faculty/additional_pages/duemer/epsy_5314_class_materials/Impact-of-the-war-on-
higher-education.pdf
Klein, M.W. (2015). Setting a U.S senatorial debate: Understanding declines in state higher education
http://corvette.salemstate.edu:2094/login?gwurl=http://corvette.salemstate.edu:2090/ps/i.do?p=I
TOF&sw=w&u=mlin_n_state&v=2.1&it=r&id=GALE%7CA439632963&asid=33af2207d07ce
5bd5615fe492814a06c
Legislative Budget Board. (2013). Financing Public Higher Education in Texas. Retrieved from:
http://www.lbb.state.tx.us/Documents/Publications/Primer/3148_Financing_Public_Higher_Ed_
Texas_Aug_2016.pdf
http://www.mass.gov/bb/gaa/fy2016/app_16/dpt_16/hrgt.htm
Financing Higher Education Kadell 18
New York State. (2017). Tuition-free degree program: The Excelsior Scholarship. Retrieved from
https://www.ny.gov/programs/tuition-free-degree-program-excelsior-scholarship
Schuster, L. (2016). In 16 charts: Higher education funding in Massachusetts. Massachusetts Budget and
funding-in-massachusetts.html
Schuster, L., & Jones, C. (2015). Debt-Free Public Higher Education: What Would It Take?.
http://www.massbudget.org/report_window.php?loc=Debt-Free_Public_Higher_Education.html
Seltzer, R. (2017). Free tuition idea revived. Inside Higher Ed. Retrieved from
https://www.insidehighered.com/news/2017/01/04/new-yorks-tuition-free-plan-sparks-debate
State Higher Education Executive Officers Association. (2015). Cuts to Utah’s higher education system
http://www.cbpp.org/sites/default/files/atoms/files/sfp_highered_ut.pdf
http://www.txhighereddata.org/generatelinks.cfm?User=PolicyMakers
Thelin, J.R. (2011). A history of American higher education (2nd ed.). Baltimore, MD: John Hopkins
University Press.
Utah State Legislature. (2015). Higher education tuition and state tax funding. Retrieved from:
http://le.utah.gov/interim/2015/pdf/00000074.pdf
Utah System of Higher Education. (2016). USHE annual report 2015 – 2016: Funding higher education.
annual-report/ushe-strategic-plan-2015-2016-funding-higher-education/
Financing Higher Education Kadell 19
Yeager, J. L., Glenn, N. M., Potter, E. A., Weidman, J. C., Zullo, T. G. (2001). ASHE reader on: