Op-Ed: Time to Adopt Better System for Funding Higher Education

by Teresa Totorica, Research Assistant at Washington Policy Center

A few weeks ago, nearly 400 students rallied at the state capital to support Washington’s higher education institutions.  With a passionate campaign to end any further budget cuts and to protect financial aid for lower-income families, the students made their point clear: it is time to restructure the funding of our colleges and universities.

As a senior at the University of Washington, this message hit close to home for me.  I believe that there are crucial decisions that need to be made to ensure a high quality and affordable college education to all families.  This past year, Washington’s cuts to higher education were among the fourth highest in the nation, still in the midst of a severe recession economy.  Budget cuts are only expected to worsen, with a prediction of further rises in tuition.

In light of the current crisis over education funding, the legislature is considering numerous proposals to restructure the funding of Washington State University, Western Washington University and the University of Washington.  One likely plan, known as Senate Bill 6562, would have our universities function more in the manner of self-governing business enterprises.  With our higher education institutions taking more control over their funds and being less reliant on taxpayer subsidies, they would have more authority to set tuition, so long as they meet prescribed performance standards.  By adopting this model, our universities will have the power to increase tuition for those families who can afford it, while offering significant financial aid to lower-income students.

States are currently charging individuals less in tuition than the actual cost to educate a student, which in essence creates a subsidy for families without taking into account their true financial situation.  This method is inefficient, because the majority of the students receiving the subsidy do not actually need it, and inequitable because the state is primarily providing financial assistance to well-off families.  Transitioning Washington’s higher education institutions to operate more as business enterprises would assure that education is accessible to all.  If implemented as envisioned, this approach would help to preserve equal opportunity for disadvantaged students who would otherwise be unable to attend.

Colorado has implemented this method of tuition reform.  As a result of rapid demographic changes and a severe decrease in higher education enrollment by lower-income students at the beginning of the 21^st century, Colorado lawmakers sought a plan that would increase opportunity for all.  Intended to help control cost and spur competition, this new policy, entitled the “Colorado Opportunity Fund,” moved the state away from funding the schools and instead funds the students.  Each student is directly funded by the state through a set number of stipends and credit hours based on their family’s economic eligibility.  On average, the state provides a stipend of $4,000 per year or $133 per credit hour.  Each state higher education institution applies for competitive grants based on factors such as high demand research and development graduate programs.  Colorado has found this enterprise system of allocating individual in-state student stipends to be very efficient and presents a reform model to Washington’s current higher education dilemma.

Policymakers who are against adopting this method of reform argue that enrollment of low-income students declines due to “sticker shock” and that the educational quality decreases as schools struggle with how to utilize and allocate funds.  The problem that has occurred in most states that implement this new model is they raise the tuition but fail to maintain their promise of providing substantial aid.  However, one condition of Senate Bill 6562 is that the average annual compounded rate of increase may not exceed nine percent over 15 years, or 14 percent in one year.  In an uncertain time of fiscal shortfalls and limits to traditional funding sources, it is time to consider granting Washington’s higher education administrators greater jurisdiction over their budget.  As a student of the University of Washington, I believe that a reform that provides universities more control over their budget and finances, while protecting financial aid, offers the fairest and most efficient way to create equal educational opportunities for all Washington residents.

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