A Student Loan Driven Education Bubble?

Sen. Art Wittich argues in the May 10 Missoulian that university students will graduate this spring with a mountain of debt because, despite ever increasing state funding, the Board of Regents has tapped into excessive student borrowing to capture new tuition revenue. The Regents apparently used all this money to pay for “esoteric degree” programs and a wasted effort at “being all things to all people.” And students are borrowing so much because the terms on Federally subsidized student loans are so easy (and will continue to be, unless Congressional Republicans are successful in their current attempt to double student loan interest rates). Reminding us of the dreadful specter of imminent financial collapse in Spain and Greece, Wittich asks “Is easy credit for college loans now creating an education bubble?”

Well, Senator, no it isn’t.

As any reasonably well informed legislator should know, over the past 20 years, state support for higher education in Montana failed to keep pace with the combined effect of enrollment growth and inflation. Take a look at this chart, which shows real state support per resident student over the period 1992 to 2012.*

Except during Brian Schweitzer’s first term, real state support fell almost constantly over the period, from $8,185 in 1992 to $5,129 this year, for a net decline of 37%. Given these cuts, the Regents had no choice but to raise tuition to offset the loss of public funding, which went from making up 76% of system revenue to 36% over the same period. In effect, public higher education in Montana was being privatized, which should have tickled Sen. Wittich pink, if only he’d known about it.

The Regents raised tuition largely to make up for lost appropriations, and there’s no evidence to support the notion that they jacked up tuition revenue so they could add unneeded or impractical programs to the University curriculum. On the contrary: Montana now has just about the leanest university system in the country. In 2010, Montana got by with total revenue per student 19% below the national average and only three states - Florida, California and Washington – managed to make do with less.**

Given these limited resources, the University system should receive greater public support and offer a broader and richer curriculum. We owe it to our children not just to train them so they can get jobs in Montana and satisfy the labor force needs of Montana businesses. Rather, we should educate them so that they can compete and prosper anywhere in a rapidly changing world, and contribute creatively to the social, political, cultural and civic life of their communities.

*State support here is expressed in real (2012) dollars and equals ongoing general fund appropriations plus revenue from the six mill levy.  One-time-only appropriations are not included. Figures are from the Office of the Commissioner of Higher Education, Montana University System.

** Revenue here is the total of tuition and state and local appropriations. Figures are from the State Higher Education Executive Officers.