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Higher Education Investment Needs Our Attention

In his Friday column,  Paul Krugman points out that state expenditures for higher ed has fallen by 12 percent over the last five years after adjusting for inflation. Krugman highlights that one result of this disinvestment has been a 70 percent growth in inflation-adjusted tuition at public four-year colleges over the last decade. This got me thinking. Is West Virginia investing enough in high ed? The answer, as we point out in this year’s budget brief, is no.

First, let’s look at our state’s investment in higher education over the last decade. As the chart below shows, state investment in higher education declined significantly over the last 10 years – decreasing by about 11 percent after adjusting for inflation. This is only one percentage point below the 12 percent that Krugman cites in his column.


So what about tuition? In 2002, the average tuition at West Virginia’s instate four-year colleges was $2,816 compared to $5,147 in 2011. After adjusting for inflation, this is an increase of about 45 percent over the last decade – not quite the 70 percent that Krugman cites, but noteworthy nonetheless. As the chart below shows, state higher education support per student as fallen by about $2,600 per student over the last decade after adjusting for inflation. What this shows is that the fall off in state support for higher ed is one reason that tuition has grown so dramatically in West Virginia. This is especially troubling given that West Virginia has the lowest share of workers in the country with a college diploma.


So, how can we do better? First, the state will need to reduce the hyper-growth of corrections spending that is crowding out higher education in the budget. This is because higher ed and corrections are both part of the 40 percent of the general revenue budget that is discretionary, unlike like k-12 and Medicaid that are mandatory spending. When one program grows faster than others, it tends to crowd out the revenue that is needed from other programs such as higher ed.

Second, we need to think out of the box (I know, I hate that term too, but it’s Friday) Our sister group in Washington State has one idea that might work. They call it “pay it forward.” It allows “students in public institutions of higher education pay no tuition up-front, in exchange for agreeing to pay 3.0% of their annual income over the next 30 years. In so doing, they “pay forward” the opportunity for future students to do the same.” Sounds promising, but it will definitely take some educating (pun intended) to get policy makers and others around this idea.

Another option is to get the federal government to close the tuition gap by redirecting tax subsidies to pay for free college education. As Michael Konczal astonishingly points out, we are probably paying more to finance student debt through the federal tax code ($22.7 billion) each year than it would cost to provide free public higher education ($15-$30 billion).

Lastly, the state could simply allocate more funds to higher education institutions. My best guess is that if we could find $300-600 million dollars it would allow the state to make in-state college tuition free. Now that would create a wonderful business climate, unlike some other ideas.

No matter what option we pursue, something needs to happen soon. As Krugman points out, we do not want “ignorance is strength” to be our new state motto.

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