Reduction in state funding for Massachusetts public colleges has increased tuition costs and student loan debt, study finds

A reduction in state funding for public higher education in Massachusetts and other New England states has resulted in increased tuitions, fees and student debt, according to a new analysis by the Federal Reserve Bank of Boston.

A report shared by the Federal Reserve of Boston on Thursday, conducted by a team of researchers, found that in 2017, state funding per public college student in New England was lower than in 2008. In that time period, public higher education funding saw a double-digit decline in Massachusetts and every New England state except Maine, according to the report.

“Public higher education produces many benefits that are vital to the New England economy, but it is increasingly at risk following years of state budget cuts,” the report begins.

In Massachusetts, state funding allocated $12,500 per public college student in fiscal 2001. By 2018, that figure dropped significantly to $8,500 per student, according to the Massachusetts Budget and Policy Center.

The decrease in funding over the last decade is mainly due to the state’s need to cover “short-term budget gaps” associated with rising costs of Medicaid and public pensions, according to the report.

That reduction in state funding has increased the costs of tuitions and the amount of loan debt for students attending public colleges in Massachusetts and other New England states, researchers found.

“Each dollar of reduced state appropriations leads, on average, to a 17 cent increase in net tuition and fees and a 30 cent decrease in instructional expenditures at public doctoral institutions,” the report reads.

The research also suggests that state funding cuts have likely resulted in fewer higher education graduates in New England.

“Estimates in this report suggest that community colleges in New England collectively granted 21,388 fewer associate’s degrees during the 2002–2012 period than they would have granted if they had received per-student state appropriations at the 2001 level each year since the 2001 recession,” the report reads.

In Massachusetts, legislators are tackling the funding issue with new bills like the CHERISH Act, which requests Massachusetts increase funding for higher education by adding more than $500 million into the state budget. The bill would also require public colleges to freeze tuition and fees for a five-year period.

Introduced just last month, the CHERISH Act has dozens of cosponsors in the Mass. legislature and is also supported by the new research shared on Thursday.

In the Federal Reserve report, researchers recommend that policymakers “provide robust financial support" for public higher education.

That financial support is especially necessary for community colleges, the report says, where the student population tends to include more racial minorities and low-income students who are more vulnerable to the negative effects of decreased state funding.

“If states need to raise more revenues to safeguard public colleges and universities, the social, economic, and fiscal benefits associated with public higher education likely will justify the additional costs to taxpayers,” the report asserts.

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