The unicorn of State reinvestment appears in Washington



Washington has done a remarkable thing. The budget passed this week actually cuts tuition at four-year colleges between 15 and 20 percent over the next two years. The already cheap community colleges will cut tuition by 5 percent. Not only that, the legislature increased funding to higher education to make up for the tuition loss. In 2017, tuition increases will be tied to the state’s median family income which typically increases 2 percent a year.

The story of how the state got here goes against all kinds of conventional wisdom. The Republican Senate proposed cutting tuition in public higher education by 25 percent and increasing state investment to make up the difference. House Democrats balked, instead proposing a tuition freeze and increased investment in the need-based financial aid program.

This move comes at a time when the national conversation is focused on student loan debt and the role of state disinvestment in the soaring cost of college. There are some things to consider as states think about following Washington down this road.

More than any other state, Washington has set a deliberate policy of high tuition, high aid. The idea was this helps target subsidies to those who needed them most while having those that could afford to pay, pay. Tuition at the four-year publics went up 34 percent over the last five years. But the state investment in need-based aid went up almost 70 percent over a similar time period. The new budget repudiates this strategy in favor of low overall tuition for everyone, regardless of their ability to pay. Policymakers should consider the trade-offs between the targeted nature of high tuition, high aid models with the simplicity of one low price.

I am not sure it makes sense to tie tuition increases to the growth in family income. Politically, it sounds great. But when we have another economic downturn and family incomes fall, what will that mean for tuition rates? Will the state guarantee its investment? Imagine a perfect storm of simultaneously falling family incomes and tuition rates while the state disinvests. It could happen, and the state should place some safeguards to ensure it doesn’t.

With this budget, Washington made a change that considered appropriations, financial aid, and tuition as complementary policy levers. That very rarely happens, but it should. Governors and state legislators should consider how their policies around appropriations and performance funding work with financial aid eligibility criteria and tuition setting.

It is possible that the case of Washington means the end of state disinvestment in higher education. With recovering budgets and increasing pressure from middle class voters shocked by the cost of college, others might follow their example. This would have implications for the current presidential conversation around debt free college. On the other hand, Washington could remain a unicorn with no other state following their lead.