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US Higher Education Trends: State Funding Rises as Tuition Income Falls; What Can UK Learn From This?

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Professor Nicholas W. Hillman's HEPI Report 175, titled "An Overview of US Higher Education," published by the Higher Education Policy Institute (HEPI), examines significant trends and developments in the US higher education sector.

The report pointed out that state funding of public higher education institutions moved sharply upwards, with a fall in revenue from tuition.

US Higher Education Trends: State Funding Rises as Tuition Income Falls; What Can UK Learn From This?

(Photo : PEXELS / Joanna Zduńczyk)

Increasing State Funding and Decreasing Tuition Revenue

In the year 2022, 50 US states gave over $120 billion to public schools' staff salaries and institutional operations. This re-investment made by the states is in contrast to the $75 billion received through tuition fees-a trend indicative of a change in funding dynamics. The trend is significant in that it represents a rebound from the previous decade when state funding was cut and schools had become increasingly dependent on tuition revenue. The uptick helped alleviate pressure on public institutions and allowed for budget stabilization and maintenance of educational quality without putting too much cost on students' backs. It reflects a broader recognition of the importance of truly affordable public higher education as a public good.

UK policymakers have a lesson to learn from this shift: the need for state investment in higher education. Increased funding from the public can help relieve the financial burden of students and make it possible for everybody to be educated at that level, not only by wealth percentages.

READ MORE: University Degrees Now Essential For Young Britons To Thrive In Tough Economy 

Shifting Popularity of Two-Year and Four-Year Courses

The declining popularity of two-year courses in US public community colleges, now at their lowest enrollment levels since the 1980s, contrasts sharply with the steady growth of four-year programs in non-profit and public sectors. This shift may be driven by perceptions that four-year degrees offer better career prospects and higher earning potential than shorter programs.

Community colleges have historically provided an accessible path to higher education, particularly for low-income students, making the enrollment decline significant. This trend could lead to financial challenges for these institutions, potentially resulting in program reductions and diminished services.

Conversely, the steady growth of four-year institutions reflects their enduring appeal and the perceived value of a bachelor's degree in the job market.

The for-profit sector rapidly expanded in the 2000s but since the late 2010s has seen various sliding growth rates. This boom-to-bust pattern of growth has ushered in much concern over these institutions regarding sustainability and academic quality, which in turn has created more scrutiny and regulation.

This should be informative in the educational pathways of UK students/educators and their policy decisions. Beginning to focus on a greater balance between two-year and four-year degree programs, for example, or the role of for-profit institutions in the higher education landscape may be a valuable endeavor for the UK. The Various Costs of

Obtaining an Education in the US

Studying in the US can likely cost money in various ways, depending on the type of institution a student will attend, where they will live, and whether they have in-state or out-of-state status. For 2022-2023, the average tuition and fees for all types of public and private institutions of higher learning came to $14,688 annually, while expenses for living arrangements averaged $12,985. This makes the overall COA $27,673 annually. However, not many students pay this full amount due to the various financial aid programs available. Tuition fees are pretty low in public institutions compared to those in private ones, and generally, costs are lower at two-year institutions.

Another critical factor that affects the overall cost of education is living arrangements. Usually, the overall living costs are higher for students who live on different campuses compared to those commuting from home. Also, out-of-state students pay much higher fees compared to in-state students, adding to the enhanced cost.

Even in the face of these high costs, financial aid programs and lower tuition fees at public institutions make higher education more accessible. The US federal government provides upwards of over $100 billion annually in financial aid and tax credits, figures that have been in decline due to dropping enrollments. In this regard. The gainful employment rule further militarizes the role of the federal government in regulating higher education by taking action against poorly performing graduate-employment outcomes for institutions.

UK students can expect to learn from the US experience in many ways, not least in the way different funding models work. Looking at how financial aid and state funding work within the US, UK policymakers will find no end of thinking and exploring ways to make higher education more affordable and better for sustainability.

The HEPI report by Professor Nicholas W. Hillman gives varied insights into the current state of US higher education. On the one hand, the rise of state funding and the decline of tuition revenues reflect a sea change in the funding environment that relieves the pressure on public institutions and eases the financial burden on students. On the other hand, the waning popularity of two-year courses and the continued growth in four-year institutions register changes in perceptions about quality related to different models of higher education. Furthermore, differences in the cost of studying in the US reflect a very complex system of higher education influenced by institutional type, living arrangements, and residency status.

These trends and shifts are indispensable for setting a broad context within which to frame policy decisions for educators, policymakers, and students who strive to understand exactly how the American system of higher education is changing. There is much that UK students and policymakers could learn from the US experience.

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