Report Shows How Higher Education Great Cost Shift Hurts Wisconsin Families and State Economy

MADISON, Wis. — Declining financial support for higher education by the state of Wisconsin has shifted costs onto consumers, increased student loan debt and decreased the affordability of higher education according to a joint report released today by One Wisconsin Institute and the national think-tank Demos. The study finds the confluence of the these factors is “endangering the quality of its institutions of higher learning, threatening the state’s economic competitiveness and the future of its young people.”

“Students and their families are doing the right thing – they’re working hard to get their education and they’ve taken on the personal responsibility to pay for it,” commented One Wisconsin Institute Executive Director Scot Ross. “But the decisions being made by state government are making that education less and less affordable, with serious consequences for our state economy.”

Major findings of the report include:

• Tuition charges at University of Wisconsin (UW) schools have been rising far more rapidly than family incomes in Wisconsin, which means that tuition has taken an increasingly large bite out of family budgets;
• Tuition revenue in 2012 eclipsed state funding as the largest source of revenue for the UW System in 2012, but total expenditures on instruction, student services, and academic/institutional support have declined slightly over the past decade;
• Institutional grant aid per student plummeted after the 2012 cuts to state funding, more than offsetting the slight increase in state grant aid per student. Federal Pell grants have risen substantially, but, as the rise in tuition revenue shows, not enough to offset increasing costs to students.
• The economic consequences of the higher education cost shift are dire — reduced consumer spending on major purchase like homes and autos and billions in lost wealth for student loan borrowers.

“The diminishing affordability of higher education in Wisconsin is eroding one of the last secure pathways into the state’s middle class,” said Robert Hiltonsmith, Demos Policy Analyst and co-author of the study. “The growth of our debt-for-diploma system is not only constraining the financial futures of Wisconsin’s young people, but sabotaging the state’s economic growth.”

Gov. Walker and the Republican majority in the state legislature have enacted the largest cuts to public education, including the University of Wisconsin and the state technical college system in state history. In addition UW students and their families were hit with a double digit tuition increase in the 2011 state budget along with stagnant levels of state financial aid. In fact, state student financial aid programs were so underfunded that over 40,000 eligible students were denied assistance in the 2013-14 school year.

The 2015 state budget introduced by Gov. Walker and currently under consideration by the state legislature calls for yet another large cut to state support for the UW and no additional resources for financial aid programs to help more eligible students. Already the UW System has approved tuition increases on out-of-state and graduate students and multiple campuses have announced plans for staff layoffs and cutbacks in course offerings.

“The data shows how state de-investment in higher education not only hurts Wisconsin families by making higher education less affordable, but the great cost shift is exploding student loan debt and dragging down our economy. If we’re going to move our state forward we need to choose a different path by recommitting to public education as a public good and reducing student debt,“ concluded Ross.

Wisconsin’s Great Cost Shift: How Higher Education Cuts Undermine the State’s Future Middle Class.