Special Report

States Investing the Most in Higher Education

The total cost of attending college in the United States has risen dramatically in recent decades — faster than inflation and faster than wage growth.Government investments in public higher education can lower tuition expenses for college students, but many governments actually cut their education funding significantly when the recession hit. While in the last three years, state spending of public universities has begun to recover, growing to $6,966 per student last year, state-level support for higher education institutions still trails pre-recession levels.

Higher education funding is a complex process, involving where funds come from such as tax policy, and where the funds are spent, such as financial aid, administrative support, and so on. The needs of the population and the political climate also play a role in these decisions. To identify the states spending the most and least on higher education, 24/7 Wall St. reviewed per pupil public higher education spending from The State Higher Education Executive Officers’ report, “State Higher Education Finance: FY 2015.”

College costs are still on the rise across the country. However, according to George Pernsteiner, president of SHEEO, “who is paying that cost has [also] shifted dramatically.”

Click here to see the states investing the most in higher education.

Net tuition — after government and institutional aid and excluding room and board and other fees — as a percent of total educational revenue has nearly doubled since 1990. That year, just 25% of public university revenue came from out-of-pocket tuition payments. Today, 46.5% of the typical public U.S. university budget comes from non-government sources. “As state and local spending per student goes down, the tuition goes up,” Pernsteiner said.

A portion of this shift of public university financing from state governments to students and families occurred during the recession. Economic changes have an outsized impact on state financing programs, including higher education funding — education budgets tend to be reduced during budget shortfalls.

In states providing above-average higher education financial support, university revenue tends to rely less on tuition. Of the 18 states with annual per pupil public university investments exceeding the national average of $6,966, only four have per student net tuition of $6,006 or greater.

The number of students enrolled at U.S. public universities has risen by 43.4% since 1990. Enrollment rose sharply during the recession, and has since tapered off, declining in each of the last four years but still higher than in 2008. According to SHEEO, these declines contributed to per pupil spending increases. Of the 19 states with faster-than-average spending growth over the past five years, 14 had enrollment declines greater than the national average drop.

To identify the states spending the most on higher education, 24/7 Wall St. reviewed state higher education investments per full time student in the 2015 academic year. How states allocate money to public colleges and universities varies, but the majority of money goes to general operations of the institutions with the rest going to various forms of student aid. These figures come from “State Higher Education Finance (SHEF): FY 2015,” a report by the State Higher Education Executive Officers Association (SHEEO). Net tuition, defined as out-of-pocket tuition payments excluding financial aid, room and board, and other fees, also came from SHEEO. Median household income and educational attainment rates came from the U.S. Census Bureau’s 2015 American Community Survey.

These are the states spending the most on higher education.

Sponsored: Find a Qualified Financial Advisor:

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.