Group Seeks Restructuring of Higher Education Financing: Higher Cost and Less Aid Could Threaten Future Diversity

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Group Seeks Restructuring of Higher Education Financing: Higher Cost. and Less Aid Could Threaten Future Diversity

by Malik Shabazz

WASHINGTON, DC -- Unless strategic changes are made in the area of funding and use of resources, the nation's system of higher education will deteriorate into a severely stratified system, oversubsidized by student debt, and, in many instances, be sub-collegiate academically, says a report issued by the Council for Aid to Education.

The report, "Investing in American Higher Education: An Argument For Restructuring," says the problems of higher education "have gone beyond the need for more money, and discussions of higher education funding must accordingly take a new turn."

Attempting to spark that public debate, the council, a national non-profit group focusing on private and corporate giving to education formed the Commission on National Investment in Higher Education, a 14-member panel of corporate and education leaders which includes former New Jersey Gov. Thomas H. Kean, now president of Drew University in Madison, NJ; Joseph L .Dionne, CEO of McGraw Hill, Inc.; and Judith Eaton, president of the Council for Aid to Education (CAE). This group will study the preliminary report and reveal its own course of action for "redesigning college and university" finance in a final report due this fall.

According to the background report, higher education must "rethink" how it is funded by moving beyond the simple reorganization of federal grants and loan supports. It also calls for "public and documented evidence" of operational efficiency of institutions and the competency of graduates, and suggests that institutions gain an accurate understanding of what the public expects from higher education. The report focuses on changing the way the corporate sector provides funding. Currently, almost three-fourths of the $1.8 billion in gifts reported by corporations goes to research-oriented, doctoral institutions in relatively good fiscal shape.

Shift to Loans

Despite the structural problems facing higher education, enrollment has continued to increase by 17 percent (from 1982-92) and has jumped dramatically in the community colleges, which have almost tripled their growth from 1970 to 1992.

Although enrollment is up and higher education remains the major factor in earning capability -- individuals with bachelor's degrees still earn almost twice as much as high school graduates -- since 1991 part of the "greater earnings associated with more education are starting to deteriorate."

Other factors creating fissures in the financial foundation include a decrease in public money. Between 1980 and 1993, federal appropriations per full-time student decreased 9 percent; state appropriations per full-time student fell 13 percent between 1987 and 1992; and state and local proportionate expenditures devoted to higher education also declined 5.2 percent in 1990.

The most telling statistic associated with the declining public support for higher education is that federal aid is moving away from grants and toward loans. During the 1970s, federal aid was normally divided between grants and loans; however in 1994-95, loans will exceed Pell grants by 60 percent. In 1976 the loan-to-grant ratio was 1.2 loans per 1 grant; the 1995 estimate will hover around 3.8 loans per grant received.

'Squeezed Out'

Already many state institutions are attempting to balance the competing areas of service and expense. In Florida, state funding at one time was well above 50 percent of the state tax fund; now it is down to 37 percent, and according to Alan Stonechipher, spokesman for commission member and chancellor of the state university system of Florida, Dr. …