Printed in U.S.A.

Foreword

-

The post-World War II wave of births What are the significant consideration sis just now flooding our colleges and in the decisions that must . be made in ,universities . Recent estimates indicate this area of public finance ?that most rapid annual percentage in-'creases in higher education enrollments This study examines these question swill occur in the years 1965-66 and 1966- . ',, :( some in more detail than others) in the67. ' After 1967 a slight decline is ex- light of the many reports now availabl epected in the absolute as well as the per- on education problems in individual

•centage increase in enrollments. Never- states as well as the 'growing literature'theless, total fall enrollments will grow on the econo,-Lnics ofeducation .:'from about Si million in 1965, to nearly

George A. Bishop, Director of Federal99 million in 1974.

:Affairs Research, was primarily respon- "The pressing needs in higher educa- ;sible for the research and . drafting of

lion have resulted in the establishment this study. The study benefited greatlyin the last five years of official or quasi- ;from the advice and comments of Pro-:official committees to study the prob- -fessor C .

Lowell Harriss, Economi cems of organization,

administration, Consultant to the Tax Foundation .. and policy-making in about two-thirdsof the states . The Tax Foundation has As this publication goes to press ,published an annotated bibliography of ;Congress is considering a new GI bil l-the studies and reports of these groups that would involve expenditures of sev-and related publications ire its Research eral hundred million dollars per year.Bibliography No. 16, Public Financing . The projections and estimates in this

<o f Hfgher Education . study do not take account of the effect s

'of such a bill on enrollments and ex -Most of the state stua:Ps have concen- :penditures ' of institutions : of higher edu-

trated on projecting future needs and cation.the problems of administration and or -ganization. The present study concen- The Tax Foundation is a private, non -trates, from a nation-wide point of view, profit organization founded in 1937 t o

-

on the problems of public, or govern- engage in non-partisan research andmental, financing of higher education, public education on the fiscal and man -

- What What is likely to be the order of mag- -,agement

aspects

of

government .

Itnitude of the tax burden for higher edu- serves as a national information agency .cation in the next five years? What for individuals and organizations con-

. " ,choices are available in the scale of pub- cerned with .government fiscal problems ,lic support? Which forms of public as- -sistance to, or financing of, students and Tax Foundation, Inc.institutions are the most appropriate? February 1966

3

PAGE

FOREWORD . . : : :,, .,, :• . 3

L INTRODUCTION .., AND SU

MARY

,

. . . : : , :. ; . , .

7.

.. .. .

.

II. SCOPE AN. ) ::PLAN'OF STUDY . . . . . . . . . . . . . . . .

.

. . . . . . . . . . . . . . . . . fJ0

III. ,FUTURE DEMANDS AND TAX BURDEN FOR HIGHE REDUCATION '. . . : : , . 12

Enrollment 'Projections :. . . .

: : . .. . . .: : :°12,

Expenditure Projections 13

The Future 'Tax Burden forHigher Education . . ; . . . . ' " 15

IV. "ECONOMIC ISSUES IN PUBLIC FINANCING OF' HIGHE REDUCATION : : 19

Education and Economic Growth

, 19. . . . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . .Rate of Return on "Investment" in Higher Education t o,

,

,

. . .20

Relevant Alternatives for Public Policy ". . . . t o ' 4 . 16 . 24

V. ;FEDERAL FINANCING OF HIGHER EDUCATION ,, , , , , , , , , , ,

: 28

-Federal Aids in the Past .26

s

. New Forms of Aid 6 1 , .~30

Alternatives to Present Programs 32, : -

V1 , STATE-LOCAL FINANCING OF HIGHER EDUCATION . 37

,Size of the Financing Problem ' 37

Tuition 42. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Student Loans 44

Scholarships 46

State Studies of Higher Education -47

Increased Efficiency 49

Long-Range Planning 50

4

, ct

.

:List =of Tables ."!TABLE

PAGE

4

L ,Current Educational and General Expenditures of Public and Pri -vate Institutions of Higher Education, 1947-64 Actual, 1969-70Projected 14

2, Projected Enrollments in Institutions of Higher Education By Typ eof Control, Fall 1963 Actual and 1970 Projected ~ 5

1 ,Current Educational and General Income of Institutions of Highe rEducation, 1961.62 and 1963-64 Actual, 1969-70 Projected 18 , :

4, Federal Obligations for Research and Development Performed B yEducational Institutions, Fiscal Years 1959-1965 17 : ,

5, Median Incomes of Families by Age of 'Head and Years of `SchoolCompl e~ed,'1964 . . . . . . 22

6, Change in Mean Income for Selected Age Croups of Males By Yearsof School Completed, 1949 and 1959 ' : . 23' '

7. Federal Obligations for Basic Research and for Research and Devel-opment Performed' by Educational Institutions and All OtherAgencies, Fiscal Years 1956.1965 ' 27

_

8 . Fe aeral. ° Budget Expenditures for Education, Fiscal Years 1956- .190 28

Federal Expenditures for Assistance to Higher Education, Fisca lYears 1961-1967 . . . . 29-..

' State and Local Covernment Expenditures for Education, Fisca lYears ,19541964 38. . . . . . . . . . .

11. . Constant Dollar Expenditures for Education, Public Schools an dPublic Institutions of Higher Education, Selected School Year s1954-1965 Actual, 1966-1975 Projected 39

126 Student Loan Operations under State Guaranty Programs, Cumula-tive to June 30, 1965 45

13, Student Loan Activity under National Defense Education Act, Fisca lYears-4959-196.5 ,:`, , .',, : :.. . ~ _

List of Charts1. •U, S. Population in Selected Age Croups, 1953 .1973 40

2. Projected Increase in Degree-Credit Enrollment in Higher Educa .tion Compared with Projected Increase in Total Personal Incomeby State, 1963.1970 41

5

,, . , . .

_„

: .

_ ,, ,

__

.

,

. _

,

;

i ~

. .

-

-

---

-

- --_

,:

~ ~

, . .

_ -,

; i

~,

.

Introduction -

For a long period in the United State swe have had a "mixed system" of highe reducation. In some parts of the countryprivate institutions have played the chiefrole, and in other parts public institu -tions have been of predominant impor -tance. The growing demand for highereducation will undoubtedly increase th e`quantitative significance of public in -stitutions in all regions . The problems ofmaintaining or improving the quality o f_'higher education as enrollment expand shave not been dealt with in this study,

' , 'but when numbers grow rapidly th egoal of providing opportunities for col-

education to all who can meet min-imum standards risks some deterioration

''of quality. The pressures on many pub-lic institutions to accommodate al l

,comers will be particularly strong. Pri-vate institutions, on the other hand ,would generally seem to be in a betterposition to control numbers with a vie wto maintaining the quality of education .

The goals of public policy towar dhigher education are several-fold . Oneobjective is to expand opportunitie's t ohose who, without additional financial

- assistance, would be unable to pursu eeducation beyond the high school level ,Other goals widely accepted are to as-sist institutions, both public and private,in meeting the flood of enrollments, t omaintain or improve the quality o fhigher education, to stimulate researc h-and the advancement of knowledge, an dto promote economic growth,

an& Summaxy

The scale on which these objectivesare being accepted today involves a con-siderable expansion of governmental ac-tivity in the field of higher education .Combined with the rapid growth o fpopulation since 1945, acceptance ofsuch goals means an increase in the taxburden for higher education . To com-bine these aims with other policy goal sinevitably requires compromises andjudgments of the relative importance o fvarious expenditures and uses of re -

'sources, both public and private . For ex-ample, the relative importance of pub-lic and private institutions will depen din part 'on the choices -that are madeamong different forms of assistance to

-students and institutions . Another cru-cial issue is the question of the natureand degree of governmental control o rinfluence over institutions of higher. edu-cation and their policies .

While it is difficult to separate 'theselarger issues and implications from thefinancial and fiscal issues in higher edu-cation, this study concentrates on thequestions of how we can finance th egrowing bill for higher education, tak-ing into account both the pressures tha tare tending to increase costs per studentand the possibilities for economies inthe provision of higher education .

A projection of trends in enrollmen tand costs per student indicates that by1970 current (educational and general )expenditures of public and private in-stitutions will reach about $16 1/2 billion

7

been largely settled by the Higher Edu-cation Act of 1965. This act provides avariety of aids to students and institu-tions with emphasis on increasing edu-cational opportunities for low incom egroups, as well as expanding the publi cservice functions of universities and col-leges .

Basic issues remain, however, con-cerning the extent and nature of Federa laid to higher education . For example ,considerable support exists for a Federalincome tax credit for a portion of tuitionand fees. The analysis in this study sug-gests that such a measure would be les seffective, per dollar of cost, as a mean sof expanding educational opportunitiesthan aid programs based largely on fi-nancial need. It would, however, avoidthe dangers of Federal control involvedin aid programs, help students at privateas well as governmental institutions, andrequire a minimum of administrative_expense.

The many .;tudy groups or commis-sions that have dealt with state prob-lems of higher education in recent yearshave differed considerably in the em-phasis placed on various sources offinancing.

One central issue is the role of tuitio ncharges, particularly at public institu-tions. A free or low tuition policy is asubsidy from all state-local taxpayers

education should be mitigated in some

provided for those who benefit from

-degree by the falling off in the rate of higher education . Recent research ana-growth of elementary and secondary

6•

y •

ry lyzing expenditures on higher educationschool enrollments. While current oper-

as an "investment" in future earning

-ating costs of public schools will con- power (or personal income) indicate stinue to mount, capital outlays for pub- that the returns on such outlays are com -lic schools are likely to fall slightly in . parable to returns on other types of in-absolute amount and to fall substan- vestment . In terms of future increases intially as a percentage of total personal income attributable to college educa -

tion, the yields from such "investment"The Federal role in higher education, would justify greater private expendi-

for the immediate future at least, has tures on higher education by those wh o

- - -assuming an annual price level increas eabout equal to that of the past decade .Making reasonable allowances for in -creases in tuition and other privatesources of funds, it appears that govern -mental sources will provide on the orderof $9 1h billion of the total current fund sexpected for 1970.

This would mean approximately a:doubling of the tax burden for highereducation in relation to total persona lincome over the period 1961-62 to 1969 -70. Despite the increased aids under theFederal Higher Education Act of 1965 ,the greater part of increased govern -mental support will come from stateand local governments —assuming ex-isting Federal legislation remains essen-tially unchanged. The state and localtax burden for higher education can b eexpected to somewhat more than doabl eas a -percentage of personal income ove r

':the period 1961-62 to 196970 .

These projections of expenditures an dthe tax burden for higher education ex-clude capital outlays . The text contain sa discussion of the probable order o fmagnitude of such outlays, but projec-tions here are little more than "guess-timates," and it is more ditticult to esti-mate the share of capital than of curren texpenditures that will be met throughtaxes .

The increasing tax burden for higher

8

receive the benefits in higher incomes .Consequently, tuition and fees may b e

- expected in the future to account for alarger share of the total cost of highereducation.

There is a case for substantial in-creases in tuition and fees at public a swell as private institutions . Tuition in -creases would not merely provide ad.di-ional funds, but also reduce the eco-

nomic inefficiency involved in currentfinancial arrangements which subsidizestudents regardless of need . The pasttuition policies of public institutions ma yhave been justified under different cir-cumstances when many such institution sconcentrated on training school teach-ers. Today most public institutions areoffering broad courses of study and stu -

:.dents are well aware of the 'fact thathigher education yields,substantial ec onomia advantages.

Correspondingly, there is room fo rmore general state scholarships, studentloan:and state guarantees of loans byprivate agencies . Scholarships areneeded to expand opportunities forthose who otherwise would be financial-ly unable to go on to higher education ,especially after further tuition increases .Loan programs are an essential ingredi-ent of a comprehensive program, par-ticularly to aid middle income families .In most states today both scholarshipand loan programs are of minor impor-tance because of the long tradition offree or low tuition at public institutions .

Opportunities exist for reduction ofcosts in the provision of higher educa-tion. There has been much discussionof possibilites of improving efficiency —

lowering cost without reducing qualit y— through increased student-teacherratios, narrowing or consolidation of

- -course offerings, fuller utilization ofspace, regional cooperation in the useof facilities and staff particularly fo rgraduate and other specialized work ,more reliance on community colleges ,use of less expensive physical facilities ,adoption of the tri-semester system . Allsuch possibilities of raising efficiency ,should be pursued vigorously.

Exploration of cost reduction possi-bilities will also be important becaus eof unavoidable increases in . the costs o fmajor elements in higher , education.Faculty salary levels will probably haveto be raised further relative to those inother 6ccupations to attract the neces-sary staff, The composition of enroll-ments is also tending toward the mor eexpensive types of education — gradu-ate training of all kinds, more scientifi cand engineering work at the undergrad-uate level .

This study did not examine the prob-lems of individual states in financinghigher education . The magnitude of th eunmet problems will vary substantiall yamong the states, in part because som ehave already gone much further thanothers in meeting higher educationneeds. Moreover, states which have beenlarge net "exporters"' of students wil lfind their tax burden for higher educa-tion rising more rapidly than others .

Readers interested in the special prob- . .lems of particular states are referred tothe state studies and other reference slisted in Tax Foundation's bibliography,Public Financing of Higher Education .

9

Scopeand p

In the light of recent research an davailable data, this study examines th emajor considerations in public financingof higher education. The study focuseson the broad problems of governmenta lsupport of higher education, includingassistance to public or private institu-tions or to students in either type ofinstitution .

Total expenditures on higher educa-=tion are determined in partby' privat edecisions and in part by governmentaldecisions. The objActive here is to ex-amine the major issues involved in gov-ernmental financing of, or assist-nce to ,higher education. A central questionconcerns the over-all size of govern -mental support 'and the jusirfication forIt. Other important questions relate t othe relative merits of different forms ofassistance and to the level of govern-ment at which aid should be provided.

These issues are significant in partbecause of rapidly growing enrollment sand expenditures for higher education .According to U. S. Office of Educationprojections, published in 1985,' expend-itures of public and private institutionsof higher education will increase (i nconstant dollars) 89 percent in the nextten years compared with an expected

- increase of 47 percent in public schoolexpenditures .

Issues of financing higher educationare also significant because of shifts in

lan.45tudy

government policy objectives . Both atthe Federal and the state and local levels

, ,of government more attention is beinggiven to the objective of promoting,economic growth . Higher education isbelieved to play an `important role inboth regional and national economi cgrowth. Large university centers, for ex-ample, attract science-based industries .The demands of business and govern-ment for highly trained manpowercon- .tinue to grow rapidly.'

Public provision of elementary an dsecondary education has long been ac-cepted largely because of the social andcultural values involved. Education, ateast to the high school Ievel, is deemedessential to the proper workings el ademocracy, which demands the basi cskills necessary to assimilate som eknowledge of public issues. Higher edu-cation may not be a political necessityfor the average citizen, but the curren t

"tendency is to accept higher educationalopportunities for all as a goal of govern-ment policy, whether justified on eco-nomic or other grounds .

The study begins with a review ofneeds and demands for higher educatio

n as shown by recent projections of en-

"rollments and expenditures . Some gen-eral economic issues in financing highe reducation are then examined. This i sfollowed by an examination of Federa laids to higher education and finally -by

1. Projections of Educational Statistics to 1974. 73, 1%5 Edition pp . 44, 45 .2. National Science Foundation, Investing In Selenti is Progress 1961.1970. Washington. D. C., 1961 .

10

an

analysis

of

issues

in

state-local fluencing cultural values, in providin gfinancing . community and national leadership, and

in advancing knowledge are necessaril yState-local problems have been anal- intertwined with student education . (By

yzed in many recent studies of higher contrast the elementary and secondaryeducation in the individual states . The schools are almost exclusively concernedstudies that deal i .Aost extensively with with the teaching function.) 3financing issues are reviewed in Chap -ter VI . A brief monograph, of course, canno t

presume to deal with all of the economi cEconomic issues cannot be entirely issues involved in higher education, or

isolated from other aspects of higher in "education beyond the high school ."education. While costs may be examined No attention will be given here to thewith some precision, their significance growing resources devoted to industria ldepends in part on the functions and training or to the specialized educatio n"output"

of

educational

institutions. services that are provided commercially .These institutions have a variety of func- The more detailed questions of the eco -tions and "outputs," some of which can . nomics of various type of institutions of ,-not be measured or even exactly defined . higher education are touched on onl yThe

roles of these institutions in in- briefly .

3 . , A recent discussion of the difficulties of treating economic issues separately can be found in Jack Wiseman ,"Cost-Benefit Analysis in Education," and "Comment" by T . W . Schultz, in "Education and the Southern

-Emnomy," edited by James W, McKie, Southern Economic Journal, July'1965, .Supplement, pp . 1-12,

1 1

Future Demands and Tax, . Burden , '.

For Hizher Education

The rapidly growing demand for cation of 7,689,000 in 1970 as comparedhigher education is reflected not only in : WAW .- projection of 6,959,000 for 1970

_

the current and projected growth in en- in the Office of Education's 'Projections: . rollments, but also in recent upward re- of Educational Statistics to 1973-74 ,

visions of projections of only a few years 1964 Edition. In the 1965 edition of this:ago. For example, Mr . Tickton, in an ap- publication, the Office of Education re -pendix to a 1964 report on higher educe- vised its enrollment projections upwardlion in New York State" noted that he. " . . to 7,225,000 for 1970 — still substantiallybelieved the projections used in the below the Mushkin-McLoone estimate.Heald Committee Study of 1960 weretoo low — largely because of the increas-

'Even granting differences in approach

ing demands for higher educational and methods, the upward revision o f

levels and specialized skills on the part enrollment estimates is startling. This

.,of industry and other employers . He suggests that the higher enrollment pro -

suggested that the projections of four jections are more likely to be correct . „

years earlier should be revised upward The U.S. Office of Education projec -by approximately 10 percent for 1970' ' : -tions were -largely based on nationaland by nearly 20 percent for 1980. -trends in enrollments by levels and. "IEnroU ment Projections

- types of institutions .' The Mushkin-

The most recent nation-wide projec-McLoone study was a composite o fProjections for the individual states tak -

lions of enrollment by state are by ing account of increased numbers of`-Selma J. Mushkin and Eugene P. high school graduates attending andMcLoone, Public Spending for Higher staying in college (including the effectsEducation in 1970 (Council of State of recent governmental programs) as

..

-Governments, 1965) . This publication well as of patterns of migration across

±n part of a larger study of state-local estate borders . Moreover, these proje cfinances, only Portions ot.which have so #ions were reviewed by state commis-far been published .- .-sions of higher education and other

After a state-by-state analysis, Mush- groups in each state, and they are spe-kin and McLoone arrived at projected cifically intended to reflect the assump-degree-credit enrollments in higher edu- lion that the "demand for higher educe-

1 . 7* Legislature and Higher Education In New York State, a Report by the Le`iaature's CooWtant o nHuber Education, Herman H . Wells, December 1964, Appendix D .

2. ` Detaib of the method" of projection are =lven in Projections of Educational St atistics to 1974.75, 1963 Edi-_. Appendix.

,_12

= lion would be met."- The authors notedthat:

Projections of expenditures of the pub-lic colleges and universities . . . involvea considerable element of judgment on'the course of higher education in theperiod ahead. We have tried to reflectin this judgment the professional opin-ion of educators and those directly

. concerned 1,vith academic affairs . (p.10. )

Thus their projection may represent a,projection of "needs" or demands ratherthan a forecast of developments if gov-ernment aids and support are not asgenerous as assumed. Their figures sug-=gest that enrollments will reach 53 per-cent of the population aged 18-21 b y1970 as compared with a ratio of 47 per -cent assumed in the earlier Office ofEducation study.

The ratio of enrollments to the popu -`lation aged 18-21 is now, at best, only acrude index of college attendance rate sbecause already a large portion of stu -

. .dents are outside these age limits . Inthe period 1958-1960 the larger agegroup 18-24 included only about 70 per-cent of male students; 27 percent ofmale students were 25 years or older . 3The average number of years spent b y,students in institutions of higher edu-cation is continuing to increase .

The Office of Education projectionsare particularly useful because theyoffer year-by-year data on enrollmentsand expenditures as well as comparableprojections on elementary and second-ary education. The year-by-year datashow, for example, the years of peak in -creases in enrollments . These projec-tions are discussed in Chapter VI .

Both the Office of Education and theMushkin-McLoone studies went onfrom enrollments to projections of cur-

rent and capital expenditures . However,the two expenditure projections weremade on different assumptions, par-ticularly with regard to prices . Mushkinand McLoone assumed that the con -Sumer price index would rise by 1 .2 per-cent per year ; this assumption is used inthe larger set of projections of the econ-omy and state-local finances of which ,their study is a part. The Office of Edu-cation :projections . assumed constan tprices.

In addition, Mushkin and McLoon eprojected state-local government ex-penditures for higher education, whil ethe Office of Education projected ex-penditures of institutions of higher edu-cation, public and private. For purposesof comparing future trends in publicand private support, the latter are moreuseful. On the other hand, more realisticfigures are obtained 1. y making an al-lowance for price increases, as Mushkin and McLoone did .

Expenditure Projections

Table 1 presents the results of a pro-jection which, on a crude basis, com-bines these two approaches . This tableprojects to 1970 current educational andgeneral expenditur r ; of institutions ofhigher education by using recent trend sin expenditures per student. The in-crease in educational and general ex-penditures per student in the eight yearperiod 1952-1960 was 46 percent and inthe period 1954-1962 it was 47 percent .This includes the effects of increase sboth in prices and in "real" costs perstudent. It can, of course, be argued thatsignificant savings in costs per studentcan be made in the next eight yearperiod. In fact, rapidly growing enroll-ments should lead to increased utiliza -

3. Louie H. Comt~er, Jr., "College and University Enrollment : Projections" in Selma J . Mushkin (ed .), Eco.nomics of Hisr er Education, U. S . Office of Education. Bulletin f 962, No, S, p . 8 .

13

Current Educational and General Expenditures of PublicanPrivate Institutions of Higher Educatio n

1947 .1964 Actual, 1969.70 Projecte d

Educational and general expendituresPer student

Percentlncreas e

Enrollment•

Total

ever preceding

(Thousands)

(Millions)

Amount

two years

, .1947-48

2,340

$ 1,400.6

$ 599

1949 .50

2,456.8

1,717.9

699

16.7

1951 .52

2,116.4

. 1,933.6

914

30 . 8

1953.54

2,250.7

2,288 .4

1,017

11 . 3

1955.56

2,678.6

2,788 .8

1,041

2 . 4

1957-58

3,068 .4

3,634.1

1,184

13.7

1959 .60

3,402 .3

4,536.1

1,333

12.6

1961 .62

3,891 .2

5,798 .1

1,490

11 .8

. 1963.64

4,528 .5

7,420.9

1,639

10.0

1969.70

7,500 b

16,500 c

2,200 d

'a . Prior c 1953 includes only resident degree-credit students ; in 1953 and subsequent years includesresident and extension degree-credit students .

b . A rounded estimate between the Office of Education projection and that of Mushkin and McLoone ,Public Spending for Higher Education 1970, Council of State Governments, 1965.

C . Estimate obtained by multiplying projected enrollment (see footnote b) by estimated expenditure sper student (see footnote d) .

d ..~-?Assumes expenditures per student increase 47% over 1961 .62, or at about the same rate as in th epreceding eight years . The 1969.70 estimate thus includes an allowance for inflation approximatelyequal to the rise In prices from 1954 to 1962, as well as a rise in real costs per student equal to tha tof the 1954 .62 period .

Source: Actual data from U.S . Office of Education . Projections are Tax Foundation estimates .

tion of capacity and reductions in some about the same rate as in recent years .costs per student . On the basis of avail- The recent upward movement of price sable evidence, however, it seems un- associated with the war in Vietnam ma ylikely that such savings will have much make this assumption less realistic -tha neffect on total expenditures ; the domi- it otherwise would be.pant forces are operating to increase per If we then assume that educationa lstudent costs, e .g., a rising teachers' and general expenditures per student insalary scale relative to that in other oc- all institutions of higher education wil lcupations, and the relative growth of the continue to rise at nearly the same rat enumber of students in high cost coursesin science and graduate

work,

as in the past —specifically by 47 per--cent from 1962-1970 — these expendi -

The past decade has been one of gen- tures would reach about $2,200 by 1969 -eral price stability but with a long-run 70 . Multiplying this figure by a projectedupward creep in the consumer price enrollment of 7 1/z million, total expend-index and in the GNP price index .' It ittlres of institutions of higher educatio nseems reasonable to assume for the long- would reach about $16 1/2 billion . Thisrun that prices will continue to rise at projection takes no specific account o f

4 . The implicit price deflator for gross national product .

14

possible changes in the proportions of mands for higher education as well asstudents in different types of institutions the forms which government aids take .

-° or courses of study nor of possible The enrollment projections shown in

-changes in the proportion of part-time Table 2 illustrate different possibilitie sstudents — except to assume that such here.;changes will continue at about the,same,

Many private institutions restrict thei rrate as in the past eight years . growth relative to their resources in

:order to maintain a certain, quality an dThe Future Tax Burdenrkind of education,

One ~ of the sig-"For Higher Education nificant characteristics of the higher

Expenditure projections are a step to- "educational system in the United State s

ward estimates of the future tax burden is that it offers a

great variety of

for this function. An examination of the kinds of education and institutional en -

future role of tax support involves the vironments .

By

their

nature,

many"issues of how the increased costs private. . . .central institutions may appropriately

"

of higher education should be financed, emphasize the '. goals of maintaining a .

and the respective roles of public and. 'high quality of educational services

;private institutions. ., and promotion of the advancement- o f'knowledge. Many public institutions ,

It seems unlikely that private institu- on the other hand, cannot avoid thetions will expand sufficiently even to obligation to enroll students who mee tmaintain their present share in total minimum qualifications (sometimes se thigher education enrollment. The extent by law), even if doing so risks someto which public institutions will increase deterioration of the quality of educa -their share will depend in part on how ti

'onal services or of other, 1nst1tut1onal ;far governments go in meeting the de- functions .

Table 2Projected Enrollments of Institutions of Higher"Educatlon a

By Type of Contro lFall 1963 Actual and 1970 Projecte d

1993 1970

Percent(Thousands)

Increas e

Office of Education -Total

4,495 7,225

6 1Public institutions

2,848 4,815

69Private institutions

1,646 2,410

46Mushkin-McLoone -

Total

4,480 7,689

72Public institutions

2,833 5,376

90Private institutions

1,646 2,313

41

a .

Degree-credit enrollment .Source ; U. S . Office of Education, Projections of Educational Statistics to 197475, Washington

D . C ,19651 Selma J . Mushkin and E. P. McLoone, Public Spending for Higher Education, 1970, Counci lof State Governments, Chicago, 1965.

15

The major future burden for student cational and general purposes ." Bothhigher education may thus be expected the total of such income and the amountsto occur in public institutions. coming from Federal, state and loca l

governments are shown in Table 3.The current tax burden for higher These latter figures may be taken as a n

education cannot be exactly determined index of the tax burden for higher edu-from available data." The Census Bu- cation excluding capital outlay .'reau data on expenditures for highereducation include capital outlays of "Educational and general expendi -which some indeterminable portion is tures" excludes "auxiliary services" —financed through current taxes . More- student residences, dining halls, college .over, current expenditures in the Census bookstores athletic programs, etc ., stu-

dent aids, and related activities, whichdeduction of applicable receipts and are financed largely from related re -charges . ;.ceipts and special sources of funds .

However, the "educational and general "A more useful starting point for esti- category includes at least three majo r

mating the tax burden for higher educa- functions which should be distinguished :tion is the Office of Education material (1) student higher education, (2) organ -

. on sources of "current income for edu- . ized research, and (3) public service s

5

For discussions of the problems of estimating the tax burden for higher education see Selma Mushkin, ed . ,The Economics of Higher Education, U . S . Office of Higher Education, Bulletin 1962, No .

Appendlx C,"

Eugene P.

"California' sand

cLoone,

Ability to Financ eJournal, Vol . 15, No . 3, September 1962, pp . 330.333 .

Higher Education : A Comment," National Tax

Table 3Current Educational and General Income by Sourc e

Institutions of Higher Education1961 .62 and 1963 .64 Actual, 1969 .70 Pmjected a-

> 1M1l2 119344

1069.70sAll

InstitutionsAll

Public

Private

Al lInstitutions

Institutions

Institutions

Institution s(Millions)

(Billions)

-

Educational and general income

$6,072 $7,788

$4,396

$3,392

$16.5Tuition and fees

1 0 505 1,881

601

1,280

4.5Private gifts and grants

451 562

116

445

2.5Other private sources

694 836

347

490Governmental sources

3,422 4,510

3,332

1,177

9 . 5-

Federal government

1,542 2 1 142

1,028

1,114

3.5Research

1,274 1,776

735

1,042

2.5Other

268 366

293

73

1.0State and local governments

1 1 880 2 1 368

2,304

63

6.0State

1,689 2,139

2,084

54

(b )Local

191 229

220

9

( b)

a. See text for discussion of projections .b. Not estimated .Source; U. S . Office of Education, digest of Educational Statistics 1964 and 1965 Editionsl 1969 .70 pro-

jections are by Tax Foundation.

16