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United States: decline in state funding to public research universities and students struggling with loan debts

In late September, the National Science Board – the governing body of the National Science Foundation – released the report “Diminishing Funding and Rising Expectations: Trends and Challenges for Public Research Universities”. This report focuses on public research universities in the United States (US). Even though only 101 universities of this type exist in the US, they are considered the backbone of the country’s higher education: they enrol a significant number of undergraduate and graduate students, perform more than 60% of academic science and engineering research and development activities funded by the federal government, and award more than half of the US bachelor and doctoral degrees.

The main results of this report indicate that the state per-student funding dropped by an average of 20% in the period from 2002 to 2010, after adjusting for inflation. Also contributing to this decline, is the fact that enrolment increased by 13% over the same period, representing more 320 000 students. More specifically, 10 US states saw a decline in state per-student funding between 30% and 48%. Only seven states increased funding in 2002-2010. The report also shows that these funding cuts have resulted in growing tuition and fees. In public research institutions, in the period of 1999-2009, the revenues from tuition fees increased by 50%. The National Science Board “is concerned with the continued ability of these universities to provide affordable, quality education and training to a broad range of students, conduct basic science and engineering research that leads to innovations, and perform their public service missions” adding further that the cut in state funding “threatens their continued capacity to attract the best talent, to provide quality education and training for the next generation of scientists and engineers, and to compete with their private counterparts”. The report also underlines the increasing gap between public and private research universities. From 1999 to 2009, instructional spending per full time student increased by 10% in public research universities, while in private research universities the increase was 25% in the same timeframe.

To further complicate things in this context of austerity, possible further cuts in the higher education area are also foreseen in the US horizon. By the end of this year, the US Congress will need to agree on a long-term strategy to reduce the deficit, or else several cuts in the budget, known as sequestration, will come into force on 1 January 2013. In September, the White House’s Office of Management and Budget released a report showing how these cuts will be distributed, should they come into place. For the higher education area, an 8.2% cut for domestic discretionary programmes and a 7.6% cut for mandatory spending programmes are foreseen.

On the students’ side, new data on the financial challenges students face have also been recently published. A report by the Pew Research Center, examining the outstanding student loan debt, has shown that 19% of the US households owed student debt in 2010, representing a significant increase from the 15% rate in 2007. In addition, 40% of the households headed by individuals younger than 35 years-old are indebted, the highest proportion among all the age groups under study.

Official data released in late September by the US Department of Education regarding the three-year federal student loan default rates for the financial year 2009, show that these amount to 13.4%, nationally. These data include borrowers whose loans entered repayment between 1 October 2008 and 30 September 2009, and who defaulted before 30 September 2011. For-profit institutions had an average three-year default rate of 22.7%, followed by public institutions with 11% and by private non-profit institutions with 7.5%.

National Science Board White House’s Office of Management and Budget Pew Research Center US Department of Education