Distribution of Higher Education Subsidies in the United States

Open Access
- Author:
- Shamekhi, Yahya
- Graduate Program:
- Higher Education
- Degree:
- Doctor of Philosophy
- Document Type:
- Dissertation
- Date of Defense:
- June 17, 2020
- Committee Members:
- John Jesse Cheslock, Dissertation Advisor/Co-Advisor
John Jesse Cheslock, Committee Chair/Co-Chair
Kelly Ochs Rosinger, Committee Member
David P Baker, Committee Member
Roger Finke, Outside Member
Kevin Kinser, Program Head/Chair - Keywords:
- higher education
fiscal policies
public policy
economics of education
subsidy
progressivity
regressivity
education finance
financial aid - Abstract:
- This research analyzes the magnitude and distribution of higher education subsidies by socioeconomic status in the United States and its changes between 2004 and 2016. Various types of subsidy, including governmental, institutional, and other private sources are taken into account and the variations within and between sectors of higher education are examined. By integrating institutional- and student-level sources of data, I find that the overall magnitude of higher education subsidies has not meaningfully changed between 2004 and 2016, which is due to the coincidence of an increase in government student aid (both federal and states’ average) and an almost equally sized decrease in institutional subsidies. The decline in institutional subsidies is characterized by two coinciding patterns: (1) a substantial decline in institutional general subsidies, which is in turn driven by a substantial increase in sticker prices and a relatively small increase in the institutions’ expenditure on education and related activities; and (2) an increase in institutional financial aid, which only partially offsets the decline in general subsidies. The substantial decline in general subsidies points to structural changes in the economics and finance of higher education in the US, which features characteristics that are different from what was depicted by earlier evidence in the literature. In the meanwhile, individuals who get the chance to enter the higher education system experience an overall progressive allocation of resources. The progressivity of higher education subsidies’ distribution has slightly increased over my study period, which is driven by the increasing levels and progressivity of government aid, and relatively steady progressivity of institutional subsidies. Finally, I find significant differences in the amount and distribution of subsidies between sectors of higher education. Regression results show the largest portion of the variation in the amount of per-student subsidy is explained by the ranking of the student’s institution–an effect that has become notably stronger as we move to more recent years.