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California’s Tuition Policy for Higher Education: The Impact of Tuition Increases on Affordability, Access, and Quality

Jacob Jackson, Paul Warren | September 2018

Summary

California has a long tradition of very low tuition for students enrolled in public higher education. The state broke with that policy in the 2000s, when recessions resulted in significant cuts to state funding for public colleges and universities—the University of California (UC), California State University (CSU), and California’s community colleges. In response, tuition increased, especially at UC and CSU. To mitigate the impact of higher tuition, the state and public colleges spent significantly more on financial aid to help low- and moderate-income students attend college. Our review shows the state was mostly able to balance its goals of affordability, access, and quality while dealing with the financial crises of the past recessions. However, it also suggests room for improvement.
  • Higher tuition made the public four-year universities less affordable for some. Overall, UC is slightly more expensive than comparable institutions in other states, while CSU is less expensive and California’s community colleges are the least expensive in the nation. Increases in tuition coincided with higher costs for some students, but financial aid generally offset tuition increases for low-income students. The most recent set of tuition increases resulted in a greater share of students taking out loans. From 2008 to 2011, the share of first-time students taking out college loans increased at UC (from 40% to 48%) and CSU (30% to 38%). The rate has since dropped to pre-recession levels at UC, but it remains elevated at CSU.
  • Higher tuition and less state funding coincided with decreases in access at public institutions. Tuition increases coincided with lower enrollments at the two public universities: the share of high school graduates enrolling at CSU was 13 percent in 2008 and hit a low of about 11 percent in 2010, before returning to pre-recession levels in 2011; at UC, the enrollment rate fell from nearly 9 percent to just under 8 percent after 2008 and has since stayed steady. During tough budgetary times, community colleges saw large drops in enrollment among graduating high school seniors, and those lower levels of access have lasted well into the economic recovery.
  • CSU and community colleges saw declines in faculty ratios and pay. The available data on quality are quite limited, but they suggest significant reductions to key measures of faculty investment—faculty-to-student ratios and faculty pay—at CSU and the community colleges. For example, when factoring in inflation, average faculty pay fell 17 percent at CSU and 13 percent at the community colleges from 2002 to 2015, while average salaries at UC increased almost 8 percent. However, it is important to note that these two indirect measures of quality are not enough to draw broad conclusions about how institutional quality changes during periods of reduced state funding and rapid tuition increases.
Looking forward, the state should consider developing a long-term tuition policy: shifting away from the yearly, budget-driven process would provide stakeholders with more certainty and prevent large, unpredictable increases during recessions. In addition, if the state chooses to develop a more deliberate tuition policy, it will be important to take into account that tuition comprises only a part of students’ rising college costs and that campuses may respond differently to tuition increases. A more comprehensive assessment of how recent changes to tuition, state funding, and financial aid have affected different student groups and institutions would help shed light on these issues but would also require more detailed data than are currently available. Tuition policy has changed significantly in California. While some call for the return to the days of very low or no tuition, eliminating tuition is now very expensive and would cost about $4 billion a year. However, even without taking such a dramatic step, California policymakers can still focus on improving current practice to ensure the state’s objectives for affordability, access, and quality in public higher education are met.
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PPIC HIGHER
EDUCATION CENTER

Supported with funding from the Sutton Family Fund

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