After the U.S. economy slipped into recession in 2007, U.S. universities and colleges were hit particularly hard. Many suffered substantial investment losses as the financial crisis deepened, including an 18.7% drop in endowments over 2009. At the same time, pushed by the weak job market, significantly more students arrived on campuses, putting stress on institutions under pressure to accept the tuition revenue to offset other losses.
A 2011 report by the Delta Cost Project, supported by the Lumina Foundation for Education, “Trends in College Spending: 1999-2009,” analyzed financial data within the higher-education sector for the academic years to characterize broadly the trends in college spending for that period.
Findings of the report include:
- Between 2008 and 2009, enrollment at U.S. universities and colleges increased nearly 5%, the largest single-year increase since the mid-1970s. U.S. postsecondary institutions conferred more than 3.2 million degrees in 2009, up nearly 38% since 1999.
- Enrollment grew the most at public community colleges, which in 2009 alone added approximately 341,000 students and grew by almost 5.5%. Since 1999, their enrollment is up by approximately 1.6 million students.
- The fastest-growing sector was for-profit institutions; their share of the undergraduate enrollments increased by 4.6 percentage points, while graduate enrollments were up 7.4 percentage points. At the same time, the for-profit sector’s total enrollment remain relatively small.
- The recession hit public community colleges hardest, as tuition increases weren’t enough to compensate for reductions in state and local funding. This put such schools in a pinch, as they had few new funds to spend on a growing number of students. As a result, per-student spending barely grew between 1999 and 2009.
- Despite a number of high-profile cases, private institutions were less affected by the recession. Education and related (E&R) spending rose between 1.5% and 2.5% among the private, nonprofit institutions, the equivalent of approximately $7,500 per student.
- Unlike previous recessions, public institutions were able to protect faculty and student services, primarily by deferring maintenance and reducing spending on administration. Staffing levels have remained stable since 2000, at less than 20 employees per 100 students at nonresearch institutions and about 30 at research institutions. By comparison, private nonprofit institutions average 45 employees per 100 students.
“Disparities between rich and poor institutions in overall spending levels have never been larger,” the authors write. “Since policy makers and the public often form impressions about higher education based on a relatively small handful of elite institutions, it is important to note that by far the largest majority of students are being served in institutions that spend on average around $10,000 per student per year — no more than we spend for elementary and secondary education.”
Tags: financial crisis, economy, higher education, youth