Year of Publication

2018

Degree Name

Doctor of Philosophy (PhD)

Document Type

Doctoral Dissertation

College

Graduate School

Department

Public Policy and Administration

First Advisor

Dr. Eugenia F. Toma

Abstract

Higher education is the third largest state expenditure behind K-12 and Medicaid but is generally more discretionary than most other budget categories. As demographic trends and economic downturns constrain state budgets, the delivery of state subsidies in higher education has increasingly shifted toward students via grant aid and away from institutions via appropriations. Since the 1990s, many states have changed the composition of their state subsidies in higher education to varying degrees.

There is a rich literature that examines the effects of state subsidies on various aspects of the higher education market. This dissertation aims to contribute to the literature on two broad fronts. First, rather than state subsidy levels, theoretical and empirical emphasis is placed on subsidy composition, or the distribution of subsidies across three primary modes of delivery—appropriations, need-based grants, and non-need-based grants. This focus is meant to reflect the policy decision faced by states, especially during times of fiscal stress, and reveal insights into important economic considerations. Second, differential impacts of state subsidies are examined not only with respect to student ability and income but also college inputs of academic quality and amenities. College amenities are an important input in the higher education market in need of more theoretical and empirical analysis.

The introduction briefly discusses the economic rationale for public subsidies in higher education and the complexity confronting states to subsidize the cost of college under various constraints and policy goals. Chapter 2 aims to orient the reader to the policy, trends, and research pertaining to state subsidies in higher education. Chapter 3 theoretically examines the response in student demand for educational resources and amenities to changes in state subsidy composition from which several policy implications and directions for future research are considered. Chapter 4 focuses on subsequent effects that changes in demand between educational resources and amenities may have on institutions. State subsidies and institutional expenditures between 1990 and 2016 are examined in order to determine whether the composition of state subsidies causes in-state institutions to alter expenditures in a way that reflects a divergence between educational and amenity inputs. Chapter 5 considers the role of college student migration with respect to state subsidies and student outcomes. State subsidies impact college choice, and in turn, alter the distance students migrate to attend college. The effect of distance on college student success is theoretically and empirically examined. Chapter 6 concludes with a summary and discussion of the main findings as well as ideas and directions for future research.

Digital Object Identifier (DOI)

https://doi.org/10.13023/etd.2018.370

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