Disinvesting in the Future?: A Comprehensive Examination of the Effects of State Appropriations for Public Higher Education

77 Pages Posted: 17 Jun 2018 Last revised: 21 Feb 2019

See all articles by Bo Zhao

Bo Zhao

Federal Reserve Bank of Boston

Date Written: 2018-06-01

Abstract

In aggregate, state appropriations are the largest revenue source for public higher education in the United States. However, these appropriations have significantly declined over past decades, drawing serious concerns about the potential negative impact on schools and students. This paper provides a more comprehensive study of the effects of state appropriations than previous research, while explicitly exploring and testing the heterogeneity of the effects by institutional type. It finds strong evidence of the negative effects of state appropriation cuts in the areas of tuition and fees, student financial aid, instructional and other school expenditures, and degree completion. Community colleges, which serve the most undergraduates but have not been well studied by past research, are shown to be particularly vulnerable to the negative effects of state funding cuts.

Keywords: state appropriations, public higher education, community colleges, state funding cuts

JEL Classification: H2, H4, H7, I2

Suggested Citation

Zhao, Bo, Disinvesting in the Future?: A Comprehensive Examination of the Effects of State Appropriations for Public Higher Education (2018-06-01). FRB of Boston Working Paper No. 18-1. Available at SSRN: https://ssrn.com/abstract=3197605

Bo Zhao (Contact Author)

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