Blog Post | August 6, 2020

OPINION: The dire need for significant federal investment in U.S. colleges and their students

Author: Michele Streeter and Jessica Thompson

Cross-posted from the Hechinger Report

The coronavirus pandemic has upended U.S. higher education. While colleges grapple with how to continue operations in the upcoming academic year, students are facing unprecedented struggles, difficult choices and limited options.

Millions of workers — many of whom are supporting students, or are students themselves — have lost jobs and incomes, and they are seeing their savings dwindle. And recent data tracking the rate of financial aid applications shows that the effects of the pandemic may be leading fewer students to consider starting or returning to college in the fall — potentially a major, long-term blow to U.S. social mobility and economic growth.

Congress must move rapidly to make significant new investments that will help students enroll and stay in college and help colleges effectively and safely serve their students (without tuition increases).

Before the pandemic hit, low-income and other vulnerable students were already facing significant barriers to attending and completing college. Research is already showing that the effects of Covid-19 are “likely to exacerbate socioeconomic disparities in higher education.” Most concerning so far is that students from the lowest-income families have seen the steepest drop in financial-aid applications.

While it’s too early to know exactly what this will mean for the coming academic year and beyond, previous research shows that students who don’t apply for financial aid are far less likely to attend and complete school, as they can’t access Pell Grants, federal student loans, work-study funds or state grant aid.

At the same time that students are re-evaluating their plans, the colleges that serve them are bracing for impact. State budgets are in free fall; early analyses suggest potential state revenue losses could be double what states experienced during the Great Recession, when states saw roughly an 11 percent decline in revenues over the two-year period of 2008 to 2010.

The Great Recession also saw a dramatic surge in students enrolling in high-cost, low-quality programs, largely at for-profit colleges. Yet many of the accountability measures created to protect students have been eliminated by the Trump administration, leaving students vulnerable.

When the pandemic hit, state funding for public colleges — which enroll three-quarters of all undergraduate students — had still not recovered from the Great Recession. Now, public institutions are bracing for significant state cuts while all colleges prepare for potential drops in enrollment, ongoing Covid-19-related expenses, and other lost sources of revenue that are unique to this public-health crisis, including drops in revenue from parking, housing and dining, decreases in hospital revenues for colleges that own or manage them, drops in revenues from facilities rentals and the loss of athletic revenue.

Of particular concern are colleges that already operate with inadequate funds, especially public regional institutions and community colleges. These schools serve a disproportionate number of our most vulnerable students — and yet face a reality where they may not be able to continue operations at all, leaving students in hard-hit areas with few accessible or affordable options.

These compounding forces paint a bleak picture of the future of affordable, high-quality public higher education. If policymakers don’t act quickly and decisively, Covid-19’s blow to college affordability could last for years to come and dwarf even the devastating effects of the Great Recession.

Through little fault of their own, states will be making major spending cuts in at least the near-term future. State cuts are expected to fall disproportionately on public higher education, often the largest pot of discretionary (not mandatory) spending in a state budget.

While the factors that affect tuition levels over time are myriad and complex, these cuts correlate with and help fuel spikes in tuition and fees, which shift ever more of the college cost burden directly to students and families. Declines in state funding have also been shown to diminish students’ ability to complete degrees. Without decisive action, the result will be greater student debt burdens and continued, or even growing, inequity in college completion by both income and race.

Though the CARES Act delivered much-needed aid and relief to students and colleges, it was nowhere near enough. Students need more direct grant aid, and colleges need help to keep operations running and to keep tuition down. To help students, Congress should start by doubling the maximum Pell Grant. Recognizing that many students will need significant additional support to pay for college, more than 80 national organizations, including civil rights groups and unions, have called on Congress to double the maximum amount of Pell Grants immediately. Research suggests that an investment of this size is needed to make serious headway in closing equity gaps.

To help colleges, Congress should send significant funding to states to shore up public colleges and universities. Based on calculations of federal support delivered during the Great Recession, we have recommended that states receive at least $28 billion in dedicated higher-education funding, with another $18 billion to be released in 2021 if the economy is still struggling.

This investment is desperately needed to enable states to cover operational costs at public institutions and to avoid steep tuition hikes at the very time that families can least afford them. As part of this effort, Congress must also extend and expand the current pause on student-loan payments and debt collection, and must explicitly address the increased risks that students and taxpayers face due to the pandemic, including the effects of the emergency transition to online learning and an increased risk of predatory recruiting.