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The number of students enrolled in public colleges and universities in the US continues to grow yet state and local governments currently devote a lower share of their resources to higher education and fund a smaller portion of the cost of educating students than they did at the beginning of the 21st century. This shift in how the investment in higher education is funded results more from changing pressures on state budgets than from a deliberate decision to shift responsibility from taxpayers to students and their families. In this paper, prepared for the National Commission on Financing 21st Century Higher Education, the authors discuss potential avenues for a more equitable and efficient funding system that can help reverse this decline in higher education spending.

The paper concludes with the following recommendations to policymakers for balancing competing demands for public funding: (1) there is a role for both tuition and public subsidies; (2) prioritise funds for students who have the most limited ability to pay; (3) prioritise institutional funding for those colleges that serve low-income students; (4) there is no such thing as free college - lower tuition increases tax burden, including and often primarily for lower-income households; (5) plan tuition increases in advance and implement on a regular basis rather than greatest during downturns; (6) stabilise funds through longer-term budgeting to help smooth tuition increases; and (7) strategically use funds to improve success rates.

The University of Virginia Miller Center created the non-partisan commission in 2014 to recommend policy and funding changes to help the US attain the goal of 60 per cent of the labor force with a postsecondary degree or certificate by 2025. With support from Lumina Foundation, the commission was tasked with developing policy proposals aimed at providing long-term sustainable finance models for US higher education. To learn more about these issues, the commission engaged highly qualified experts to create 10 white papers on different dimensions of the higher education problem. The Commission suggests that higher education needs new financing options to increase educational attainment for all students, but particularly for low income students and students of color and to encourage innovative, high-quality, lower-cost forms of teaching and instruction.

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