Department

The Disconnect

A troubling lack of state funding is shifting the burden of higher education costs onto students—and the real victim might be Colorado’s future economy.
January 2014

Darian Guenther, an 18-year-old senior at Northglenn High School, is doing everything right to get into college. Her 4.3 GPA ensures her admission to any number of schools, as does her strong performance in her five current AP classes. Everything’s going perfectly for Guenther, who one day wants to enter the medical field. Everything except for finances.

Her mother, Jessica, 34, is an unmarried social worker who’s still paying off her own student loans. Jessica considers herself to be middle-class; she simply doesn’t have the money to cover Darian’s forthcoming college costs. Their fervent hope is that Darian will receive some serious scholarship cash. If that doesn’t happen, they’re not sure what they’ll do.

Even though Colorado has ranked among the top five most educated states in the nation since as far back as 1940, Darian’s situation is becoming more and more common. “You see a lot of students who are in the bind that Darian is in,” says Northglenn High’s assistant principal Matt Oehlert. “And it’s not just kids like Darian; it’s a universal struggle for all the kids who want to go to college. In Colorado, it’s getting worse and worse.”

“We’re this funny square state in the middle of nothing with highly educated people,” says James Jacobs, a higher education policy analyst at Colorado Mesa University. He’s seated at a granite-topped counter in his Denver home, and he’s delivering what seems like great news: Colorado has stellar, nationally recognized colleges and universities. We have high-paying jobs ready to be filled by all our fresh-faced graduates. And, he says, we’ve long been a high-income state.

Then Jacobs reveals a sobering follow-up: When it comes to educating our own these days…well, we’re not exactly failing, but there’s tremendous room for improvement. Over the past decade, Colorado has reduced its higher education funding by hundreds of millions of dollars. (In 2000, the state covered 68 percent of a student’s costs at Colorado public universities; now, the proportion has dropped to just 32 percent.) That, in turn, has produced skyrocketing tuition rates, which have begun pushing low- and middle-income families (often minorities) out of the collegiate system. If these trends continue, Jacobs warns, Colorado workers will increasingly have only high school diplomas, not advanced degrees, making it more difficult for them to land jobs—and potentially affecting the state economy.

Colorado now ranks 49th in state spending on higher education, down from 35th in 1991. Why the decline? Some of it has to do with TABOR, the loved and loathed 1992 legislation that’s jujitsu-ed our public funding process into submission. TABOR dictates that tax hikes must be put to a popular vote and that the state cannot spend more than six percent above the previous year’s spending (after adjusting for inflation and population growth). This remains true regardless of how much revenue is generated without raising taxes—or how much has been lost because of predicaments like the recent recession.

The situation has victimized higher education funding via repeated cuts, because higher education is the only public service with the alternative revenue stream of tuition. Subtracting from college funding lets the state finance other services in hard times without reaching TABOR’s spending limits. Over the years, our Legislature and various governors have repeatedly told postsecondary institutions: You can always raise tuition.

Doing so shifts the burden from the state to students (or their parents) via loans the families hope will one day prove to be worth it. Last spring, the University of Colorado Board of Regents approved an 8.7 percent tuition hike, and over the last 12 years tuition at CU has increased by 139 percent. Unless you’re part of the upper middle class (or above), how do you afford the annual in-state $10,343 tuition (including mandatory fees) at CU Boulder—not to mention the associated costs of housing, food, books, and the many other etceteras any college student faces?

The wealthy can cover it. The poor can get Pell Grants, but those top out at $5,645—a mere dent in the annual cost of many four-year colleges. As for middle-income students like Darian, whose families make too much to qualify for meaningful grant money but not enough to pay the tuition outright, the path isn’t so clear.

According to the Colorado Commission on Higher Education, by 2018 about 70 percent of the jobs in Colorado are expected to require at least some postsecondary education. The demand for college-educated adults in Colorado is the fifth highest in the nation, whereas the demand for high school graduates is the second lowest. To remain competitive and earn a decent income and a secure future, our young people need college degrees. Until voters approve more higher education funding, loans will remain most students’ best option.

In the meantime, rising tuition costs and residual effects from the Great Recession mean loan debt, and defaults, are rising. (As of fiscal 2009, Colorado had the 10th-highest student loan default rate in the nation.) Nearly 37 million Americans collectively owe more than $1 trillion in student loans. The average Coloradan leaves college with debts between $20,000 and $30,000. That’s on par with the national average per student of $26,500, which the National Association of Student Financial Aid Administrators considers “manageable.” It may well be manageable for future lawyers or businesspeople. But because of the debt student loans create, our future chemists, anthropologists, journalists, fitness trainers, and dental technicians—all of which ranked among the employment search website careercast.com’s worst jobs in terms of their physical demands, work environment, income, stress, and job outlook—have yet another reason to consider different professions.

Even so, a student’s major matters far less than simply obtaining a degree, and that’s where Colorado really needs to improve. While the state produces many graduates and has, for the moment, a robust jobs outlook, the students who make up the fastest-growing segments of our population—low-income families and minorities, primarily Hispanics—are the ones we’re serving the least: Whites along the Front Range between 25 and 64 years old have a 53 percent degree-attainment rate, while Hispanics hover around 18 percent. It’s disparities like these that have left Colorado with the second-highest degree attainment gap in the country between whites and minorities.

Those with postsecondary degrees or certificates earn higher incomes, have lower unemployment rates, and rely on fewer social programs. But even supporting these noble goals can be an area of contention around the state. Lieutenant Governor Joe Garcia, who’s also the executive director of the Colorado Department of Higher Education, says, “Some people think [higher education] is a private benefit, and if you want to make more money by getting a college degree, you ought to be the one paying for that.”

That mindset reflects a widespread myopia about how states can benefit from an educated workforce. As a group, college graduates fuel a vibrant economy and live healthier lives. Having educated workers means there are more jobs, higher salaries, and less crime. If current trends don’t change, jobs that require postsecondary degrees will be harder to fill with Coloradans. Instead, plum positions will go to transplants, which could create a permanent underclass among natives. “That will impact all of us,” Garcia says. “People will earn less money. They’ll be less likely to be tax contributors and more likely to be a net drain on the economy because they’ll require taxpayer-provided services.” Or, as Dennis Jones, president of the National Center for Higher Education Management Systems, puts it: “Students will pay more. The state’s going to pay less. More and more students are going to get shut out, and Colorado will become an increasingly less appealing place to live and work.”

Reversing the trends can only happen by popular vote, but recent polls suggest there’s no appetite for raising taxes to fund higher education. (As the November drubbing of Amendment 66 showed, there’s not much enthusiasm for funding public elementary and secondary education, either.) Jacobs believes it will require a more nuanced approach, such as increasing vocational training or using MOOCs (Massive Open Online Courses), the latest online education trend. But his pessimism is implicit in the advice he offers to parents: If you want to send your child to college, Jacobs says, “Start putting your money away now.”

There is some hope. Governor John Hickenlooper’s 2014 budget proposal includes a $100 million bump for higher education thanks to new discretionary spending dollars. About 60 percent of that will help colleges control their tuition increases. The other $40 million would be the largest increase ever in Colorado for need-based financial aid, and it includes a change to the financial aid model. Historically, institutions received funding based on enrollment, not graduation rates, which has de-emphasized student retention and graduation practices. “We’re changing our financial aid model so that when we give you financial aid dollars, we’ll give you a certain amount for every freshman,” Garcia says, “but we’ll give you more for every sophomore and more again for every junior, so that you, as an institution, have an incentive to keep those
students around.”

But even with the increase, Colorado still has $50 million less in higher ed funding than it had as recently as 2008. “We’re still pretty far behind our competitor states,” Garcia says, “but at least we’re now ticking up instead of ticking down.”

And as for Darian, Jessica insists she will find a way to get her daughter to college. “If I have to get five jobs,” Jessica says, “I’ll get five jobs.”