The study addresses the question, “Does Public Funding for Higher Education Matter?” and it comes out of the Cornell Higher Education Research Institute, which has released a number of reports recently on state higher education funding issues.

Assistant professor of higher education at the University of Minnesota Liang Zhang, who is a Cornell faculty associate, used data from the U.S. Department of Education’s Integrated Postsecondary Education Data System (IPEDS) and from the College Board. He carefully analyzed eight undergraduate groups’ six-year graduation rates, and controlled for a number of factors—institutional type, percentage of students with high SAT scores, percentage of students who live on campus, percentage of minority students and percentage of full-time students—all the factors that affect graduation rates.

He found that, when other factors are held constant, a $1,000 increase in state appropriations per FTE student at four-year public institutions is associated with a 1 percentage point increase in graduation rates. One percent may not seem like a lot, Zhang says, but when policymakers are calling for increased graduation rates yet are cutting funding, it is no surprise that colleges are not able to adjust quickly.

Zhang also found evidence that when states increase support for universities too slowly or cut funds, tuition rates tend to quickly increase, which also acts to depress graduation rates.

The report is significant for a number of reasons. It comes at a time when the Spellings Commission is recommending holding institutions more accountable based on student outcomes (such as, graduation rates) but state and local support per student is at a 25-year low. Also, it comes on the heels of two other studies Zhang has done with Cornell researcher Ronald Ehrenberg. These studies show that institutions are dealing with funding cutbacks by relying more on contingent faculty, and that this is adversely affecting graduation rates at four-year institutions (see Feb. 2006 Campus Clips, “Ehrenberg reports changing face of faculty”). Overall, the studies help discredit the opinion that institutional inefficiency is the cause of poor performance and therefore, more funding won’t solve the problem.

“This is the closest we have ever gotten to empirical or quantitative proof that funding does matter,” says Zhang. As his report concludes, “there is no such thing as a free lunch when it comes to graduation rates at public higher education institutions.”

You can find this report at www.ilr.cornell.edu/cheri/wp/cheri_wp92.pdf
and search the site for the earlier Ehrenberg-Zhang studies.

In gauging college pricing trends, the College Board looks at both the published price of public and private colleges and universities and the net price—the average price students pay after grants and tax benefits are factored in. It reports that the published tuition and fees at four-year public colleges average $5,836 in 2006-07. This is a $344—or 6.3 percent—increase over last year. With grant aid and tax credits factored in, the average full-time student enrolled at a public four-year institution pays $2,700.

Each year between 1996-97 and 2002-03, the price of public four-year college declined or just kept pace with inflation. However, the College Board notes, for the past four years, the average net price students pay at public four-year colleges has increased even more than published prices because grant aid has not kept pace.

The news is somewhat better for students at two-year public colleges. Published tuition and fees average $2,272, up $90 from last year. But after grants and tax benefits are considered, full-time students pay less than $100 on average. After adjusting for inflation, they are paying less now than a decade ago.

The College Board also looks at time to degree and finds that, among bachelor’s degree recipients in 1999-2000, students at four-year public institutions took an average 6.2 years to complete their degree. At private institutions, the time to degree was an average of 5.3 years.

From these findings, College Board president Gaston Caperton concludes that “both affordability and rigorous academic preparation are critical to improving access to college.” View the report at www.collegeboard.com.