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

by Amy Y. Li & William Zumeta - 2019

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.

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Cite This Article as: Teachers College Record Volume 121 Number 8, 2019, p. 1-38
https://www.tcrecord.org ID Number: 22707, Date Accessed: 9/20/2021 4:11:51 PM

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About the Author
  • Amy Li
    University of Northern Colorado
    E-mail Author
    AMY LI is an assistant professor of Higher Education at the University of Northern Colorado. Her research focuses on higher education finance and policy, specifically performance funding, financial aid and student loan debt, “free” college programs, state appropriations, and state policy adoption. Her recent works include “Performance Funding Policy Impacts on STEM Degree Attainment” in Educational Policy, “Dramatic Declines in Higher Education Appropriations: State Conditions for Budget Punctuations” in Research in Higher Education, and a co-authored piece on “Institutional Accountability: A Comparison of the Predictors of Student Loan Repayment and Default Rates” published in the ANNALS of the American Academy of Political and Social Science.
  • William Zumeta
    University of Washington
    E-mail Author
    WILLIAM ZUMETA is Professor of Public Policy & Governance and of Higher Education at the University of Washington in Seattle. He is a TIAA Institute Fellow and served as President of the Association for the Study of Higher Education in 2009–2010. His research interests are in state higher education policy and finance, including accountability policies and policies affecting private institutions and community colleges, among others. He is first author of Financing American Higher Education in the Era of Globalization, with D. Breneman, P. Callan, & J. Finney (Harvard Education Press, 2012). He is co-author, with Alicia Kinne-Clawson, of, "The State Higher Education Executive Officer and Higher Education Finance," a chapter in D. Tandberg, B. Sponsler, R. Hanna, & J. Guilbeau (Eds.), The State Higher Education Executive Officer, in press at Teachers College Press.
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