Funding in Higher Education 2
Abstract
Higher education is a constantly evolving arena that requires many sources to maintain
and elevate. Of those sources, the role of funding cannot be overstated. The financial competency
of higher education institutions is not only influential in ensuring their survival, but also in
shaping the quality of education they provide, student affordability, access, and success. There
are 3 major questions that tap into the finances of an institution. The first being size of enterprise,
efficiency and productivity second, and lastly revenue sources.
Funding in Higher Education 3
Size of Funding
The size of America's publicly funded higher education enterprise is complex and
involves many entities. According to Bastedo et al., (2016) The American higher education
enterprise is enormous—in number of institutions, in enrollments, and in expenditures. These
variants constitute the amount of funding allocated and where the funding comes from.
“Research universities tend to pay higher salaries and to require student-faculty ratios that can
accommodate research expectations and lower course loads in addition to expensive libraries,
laboratories, computational power, and other research-related expenditures.” (Bastedo et al.,
pg.219, 2016) This could be the same for private, liberal arts colleges no matter the size. Since
these colleges are not publicly funded, and more prestigious, finances could be the same if not
more as the big research universities. Adversely, junior or community colleges are expected to
spend less because of fewer enrollments, which equals less finances for everything. According to
a study of expenditures of college in 2012 by NCES, private 4-year colleges expenditures were
the highest at $24,454, then public 4-year universities at $13,367, private 2-year $10,547, and
public 2-year colleges at $6,391. Then there is the question of where the money comes from?
This also varies upon the type of institution.
Efficiency and Productivity of Higher Education Enterprise
Higher education efficiency and productivity is unique for every institution. It can vary
based upon a college's end goal. “Howard Bowen's famous revenue theory of cost, which
postulates that colleges and universities raise as much revenue as they can and spend all that they
raise-seemingly purposefully and for purposes appropriate to their mission." (Bastedo et al.,
p.320, 2016) Depending on the goal, whether it is student enrollments, degrees granted,
scholarship produced, services rendered, or combinations, the costs of attendance are going to be
Funding in Higher Education 4
varied. Each unit reflects a different aspect of the institution's purpose. For example, part of East
Carolina University’s mission is to: uses innovative learning strategies and delivery methods to
maximize access. This mission could reflect access to technology as their unit since it can be
used as a delivery method. “We know that per-student costs vary greatly. Higher education is
generally assumed to be more costly at research universities than at undergraduate colleges due
to the higher salaries, lower teaching loads, and more extensive academic support”. (Bastedo et
al., pg.329, 2016) In conclusion, determining what public higher education should cost per unit
requires an approach that considers the institution's mission, societal needs, and the affordability
and quality.
Revenue Sources
There is a vast array of sources for revenue for higher education institutions. Sources
include tuition and fees, services,public funding(state and federal student aid and support for
research), athletics, endowments, and gifts. These sources of funding are allocated between 4
different parties. “Revenues in support of higher education come from: (1) parents, (2) students
(3) government, or taxpayers, at state and federal level; and (4) donors, or philanthropists.”
(Bastedo et al., pg.321, 2016) The sharing of the funding is not equal and is everlasting changing.
“The sharing and shifting among these parties can be a zero-sum game in which a lessening of
the burden upon, or revenue from, one party must be compensated either by a reduction of
underlying college or university expenditures or through a shift of the burden to another party.”
This is very problematic in the current state of higher education when cost of attendance is
increasing and amount of state funding decreasing. The burden is shifted to the student which
makes affordability unreasonable. “At public research universities, nearly all of the revenues
from student tuition increases were used to offset revenue losses from other sources, primarily
Funding in Higher Education 5
state appropriations.”(Delta Cost Project: Trends in College Spending, 2019) Students are left to
take out more loans to pay for college and compensate for housing and meals in which some
financial aid would not cover that. In turn some students are left in major debt, and some do not
choose to continue the college pathway. With the decrease in funding from the state, it is
interesting to mention the shift of parties from student to state 4 colleges in North Carolina. The
NC Promise Plan lowers the cost of tuition each semester to $500 dollars per semester and in the
return the state has provided additional funding to make up for the lost revenue from tuition. This
plan has increased enrollments by 50% across all 4 universities. “When you can reduce those
financial barriers and make sure residents of your state understand that college is something
within their reach, it enables people to start thinking differently about their future.”(North
Carolina Expands Its $500 Tuition Program. Will It Keep Paying for It?, 2022) With
affordability and access being a major issue in higher education it is important to note that there
are ways to minimize the effects of the burden. Like shifting from party to part for allocation of
funds. All it takes is innovation, faith, and a plan to put it into action.
Social and Political Context
The funding of higher education is rooted in the social and political dynamics of a
society. When making decisions to ensure the continuity of universities, under the umbrella of
funding, it is important that leaders in government, institutions, and stakeholders consider the
current needs of society. “Fundamental to the economic, social, and political context is the fact
that higher education is recognized both as an engine of economic growth and as a gatekeeper to
individual positions of high remuneration and status.”(Bastedo et al., pg.215, 2016) Like in the
past with the Morrill-Land Grant Acts of 1862 and 1890, society was emerging into different
fields of agricultural, military, and mechanical arts and the latter for equal opportunities for
Funding in Higher Education 6
Black Americans. “The Morrill-Land Grant Act of 1890 forbade racial discrimination at
institutions receiving funds associated with the first Morrill Act, but stated a separate land-grant
university for African American students satisfies the law.”(Allen & Esters, n.d.) This ensured
that for the population at the time that education was accessible for all. Currently affordable
education is at the head of social and political issues. In fact, according to Best Colleges (2022),
President Biden released memo stating, “We urge you to use every tool at your disposal to
deliver relief to the millions of families inspired by your proposal to make a debt-free college
degree within their reach by eliminating up to $50,000 in federal student loan debt for all
families before payments resume.” It is important that any allocations to funds be considered
based on what society needs and what is going to move society forward.
Biblical Worldview
From a biblical perspective, the bible tells us that we should extend our hand to help
those less fortunate. Providing financial assistance is grounded in the teachings of compassion,
generosity, and stewardship. Scriptures emphasize the importance of helping those in need,
showing love for your neighbor, and sharing resources to alleviate the burdens of others.
Proverbs 19:17(NIV) “ Whoever is kind to the poor lends to the Lord, and he will reward them
for what they have done. Additionally, Matthew 25:40(NIV) “Truly I tell you, whatever you did
for one of the least of these brothers and sisters of mine, you did for me.” The bible instructs to
be open-handed and generous, and that wealth is a gift from God to be used for the well-being of
others. Hence the need of making education affordable for all is linear within the expectations of
the biblical worldview.
Funding in Higher Education 7
References
Allen, B., & Esters, L. (n.d.). Historically Black Land-Grant Universities: Overcoming
Barriers and Achieving Success. Rutgers Center for Minority Serving Institutions.
https://cmsi.gse.rutgers.edu/sites/default/files/HBLGUs_0.pdf
Bastedo, M. N., Altbach, P. G., & Gumport, P. J. (2016). American higher education in
the Twenty-First century: Social, Political, and Economic Challenges. JHU Press.
Delta Cost Project: Trends in College spending. (2019, September 26). American
Institutes for Research. https://www.air.org/project/delta-cost-project-trends-college-
spending
New International version (NIV) - Version Information - BibleGateway.com. (n.d.).
https://www.biblegateway.com/versions/New-International-Version-NIV-Bible/
North Carolina expands its $500 tuition program. Will it keep paying for it? (2022,
March 15). Higher Ed Dive. https://www.highereddive.com/news/north-carolina-
expands-its-500-tuition-program-will-it-keep-paying-for-it/620355/
These higher ed policy issues will define 2022 | BestColleges. (2022, February 1).
BestColleges.com. https://www.bestcolleges.com/news/analysis/2022/02/01/higher-
education-policy-2022-midterms/
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