Cut college costs with experiments, incentives

Tim Goral's picture

President Barack Obama announced a new push last month to curb the rising cost of college. Thankfully, state governments, which helped cause the problem, are experimenting with ways to fix it. The federal government can help.

Obama is right to highlight the expense of going to college. Tuition, room and board at public universities went up 46 percent in real terms in the decade to 2010. Yet only a fraction of that increase reflects rising costs. The main thing is that state funding per student has fallen by about a third, leaving students to pay more. The share of college revenue that comes from students rose from less than 30 percent in 2000 to almost half last year.

One of the pressures on state spending per student is enrollment: Between 2000 and 2010, the number of undergraduates at public institutions rose 30 percent — three times faster than the population as a whole. The share of state spending going to higher education slipped during this period, and the recession put further pressure on state budgets.

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