Time to End Direct Higher Education Subsidies

Harrisburg, PA — The Commonwealth Foundation applauds the Pennsylvania House Democrats’ proposed elimination of higher education funding in the state budget, forcing lawmakers to re-examine the state’s role in funding institutions of higher education.

“The $27.8 billion spending plan (with plans to create a new billion-dollar fund for higher education) is far more than is needed to pay for the core services of government, keeping the state-related universities in the General Fund budget is inconsistent with the rest of their proposal, and their move is likely nothing more than a political gimmick,” said Matt Brouillette, president and CEO of the Commonwealth Foundation. “Nonetheless, it does help advance the debate on higher education funding. In fact, it could serve as the catalyst to get the state out of the higher education business altogether—a reform that would be good for education, good for students, and good for taxpayers.”

In a recent report on higher education, the Commonwealth Foundation recommended the elimination of direct state subsidies to universities, to be replaced with means-tested grants to students.

Institutional funding does nothing to lower student costs; in fact, evidence suggests state government subsidies actually contribute to rising higher education costs.  Instead of helping universities lower tuition fees, state aid provides administrators with a never-ending source of undesignated funds. This means the money intended to lower a student’s tuition bills is easily spent on frills, like new sports stadiums or non-academic buildings.  Furthermore, all evidence indicates that appropriations to universities provide little economic benefit to Pennsylvania.  

“Give the failure of ever-increasing higher education subsidies to lower the cost of tuition, or to improve our economic climate, it is time to adopt a new approach,” Brouillette added. “Ending institutional funding is the first step to making college more affordable in Pennsylvania.”  

The General Assembly should take the proposal to its logical conclusion—eliminating direct funding for the state-owned institutions, state-related universities, and community colleges in favor of means-tested student aid.

Furthermore, if House Democrats want dedicated funding for student aid the best alternative would be sell PHEAA to the highest bidder and put the proceeds into a trust fund—truly ending state government’s involvement in the higher education business.


Editor’s Note: Click here to access the full policy brief, High Costs of Higher Education.

The Commonwealth Foundation (www.CommonwealthFoundation.org) is an independent, non-profit public policy research and educational institute based in Harrisburg, PA.