Helping Students or Just Taking Their Cuts? How Prioritization of State Student Aid Programs Responds to Downturns in Higher Education Appropriations

Background/Context: During downturns in state higher education support, state student aid becomes especially important for affordability because colleges react by increasing tuition, and other aid sources may not fully respond. From a policy perspective, states might be expected to protect aid support in response to fiscal stringency, yet this key relationship is understudied. We use social construction theory framing, hypothesizing that, because college students are positively construed as a “deserving” target population, policymakers prefer allocating benefits to them relative to institutional support, particularly in hard times.

Purposes: We seek to better understand the long-term shift in state higher education funding away from institutional support toward student aid, with particular interest in whether this trend accelerates during fiscal stringencies when tuition spikes increase the salience of students’ needs. Further, we aim to understand structural, political, and economic characteristics of states that prioritize student aid during downturns versus not.

Research Design: Across 50 states from 1980–2013, we identify periods of substantial downturn in higher education appropriations, observing 109 such cases. Within these state-specific downturns, we compare percentage changes in student aid funding versus institutional support, classifying budgetary responses into three priority categories: student aid, institutional support, or budgetary equity. We conduct a regression across 1,700 state-years to investigate whether the share of appropriations allocated to student aid differs in downturn versus non-downturn years and employ a random effects model to explore trends within states. We employ a logistic regression to estimate the relationship between student aid prioritization and state-level factors.

Findings: States prioritize funding for student aid in most downturns, fewer in the 1980s, but consistent at around 80% across more recent sub-periods (1990s, early 2000s, late 2000s–2010s), indicating considerable stability in this dimension of state higher education policy cultures. On average, states increase student aid’s share of higher education appropriations more sharply during downturn years (2.6 percentage points higher aid share) than other years. States with more aid per student and a lower unemployment rate at downturn onset are more likely to prioritize aid. Magnitude of tuition increase during downturns was not a significant factor.

Conclusions: This study contributes to discussions about higher education affordability policies by illuminating both the relative resilience of student aid support in downturns and that the long-term increase in aid’s share of higher education appropriations is more likely a reaction to tuition growth than an explicit “voucherization” of higher education finance policy.