The Pew Charitable Trusts released a report that examines recent trends in higher education funding across levels of government. The report details higher education funding from both state governments and the federal government.
Among the findings:
- The federal government generally provides financial assistance to individual students and funds specific research projects. State support for higher education typically funds general operations.
- In 2017, federal and state government support comprised 34% of public institutions’ total revenue.
- 21% of total revenue came from state governments, and 13% came from the federal government.
- Higher education is the 3rd largest expenditure for states (behind elementary and secondary education and Medicaid), but is only 2% of the federal budget (excluding student loans).
- Just under 50% of the Department of Education’s budget is devoted to higher education. The National Science Foundation, the Department of Veterans Affairs, and the Department of Health and Human Services also fund higher education.
- The federal government spent $75 billion on higher education in 2017 (excluding student loans and tax credits).
- One third of this was spent on Pell grants and another third on research funding. The remaining third was spent on other grants and veterans’ assistance programs.
- State governments spent $87 billion on higher education in 2017. $66 billion went towards general operations.
- The remaining funds went towards research funding and grants.
- 71% of federal support for higher education goes to public institutions. 98% of state support for higher education goes to public institutions.
- Funding by both federal and state governments shifted during and after the 2008 recession.
- Federal government expenditures on Pell grants and veterans’ assistance increased throughout the recession, as all types of state expenditures decreased.
- Pell expenditures increased 96% between 2008 and 2010, before declining annually since 2010.
- Federal higher education expenditures for veterans increased by $9.5 billion between 2008 and 2017.
- Between 2000 and 2015, federal FTE expenditures increased 24%, while state FTE expenditures decreased 31%.
- Per FTE revenue varies across states. Funding per FTE from the federal government varies from $3268 (Missouri) to $9693 (Hawaii). Funding per FTE from state sources varies from $2769 (Colorado) to $20265 (Alaska).
- Most Pell grant and federal research funding goes to public institutions. Most federal veterans’ assistance dollars go to for-profit institutions.
- 70% of Pell grants go to students at public institutions, 15% go to private, non-profit institutions and 15% go to for-profit institutions.
- 61% of federal research funding goes to public institutions, and 39% goes to private, non-profit institutions.
- 37% of federal veterans’ dollars for higher education go to public institutions, 29% go to private, non-profit institutions, and 35% go to for-profit institutions.
- For context, 70% of students enroll in public institutions, 23% enroll in private, non-profit institutions, and 7% enroll in for-profit institutions.
- Federal student loan borrowing increased sharply after the recession, and has been in decline since.
- Federal student loans increased 26% between 2007 and 2018, while enrollment increased 14% over the same time frame.
- In 2008, the federal government issued $80 billion in student loans, which increased to a peak of $119 billion in 2011. While federal student loan borrowing decreased each year since 2011, the federal government issued $94 billion in student loans in 2018.
- Federal tax benefits rose to $40.5 billion in 2017, up from $13 billion in 2000. Most of this growth comes from the 2009 American Opportunity Tax Credit.
