State funding to public colleges sees a minimal increase beyond inflation

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FY24 brought increases in state financial aid, large declines in tuition revenue

The latest State Higher Education Finance (SHEF) report finds that in 2024, public higher education appropriations per full-time equivalent (FTE) increased 0.8% beyond inflation, surpassing pre-COVID-19 pandemic funding levels in 2019 by 17.9%. The SHEF report also finds that public FTE enrollment increased for the first time after 12 consecutive years of declines. Yet fiscal year 2024 marks the largest decline in tuition revenue per FTE since the start of the SHEF dataset in 1980.

After a short recession in 2020 due to the COVID-19 pandemic, historical patterns following economic recessions reversed. Instead of the typical decrease in state funding following a recession, education appropriations increased for the 12th straight year, rising $1,774 per FTE from pre-COVID-19 levels. Additionally, inflation-adjusted education appropriations per FTE were greater than pre-recession funding levels in 2008 by 9.0%, or $969 per FTE. The increase in education appropriations per FTE over time can be attributed to three notable trends: increasing state commitments to higher education funding, a sharp decline in FTE enrollment, and generous federal stimulus funding. 

Additional findings from this year’s report include:

  • After 12 straight years of declines, public FTE enrollment increased, reaching 10.4 million in 2024, up 2.9% since 2023. Despite this increase, FTE enrollment was still down 10.8% from an enrollment peak in 2011. Nationally, public institutions have lost all the additional FTE enrollment gained following the Great Recession. 
  • State and local government funding for higher education totaled $139.1 billion in fiscal year 2024, including more than $624.1 million (0.4%) in federal stimulus funding. Inflation-adjusted federal stimulus funding for higher education declined 63.3% from fiscal year 2023.
  • Education appropriations per FTE decreased 3.3% at two-year institutions and increased 1.8% at four-year institutions. Without federal stimulus funding directed by states to higher education, inflation-adjusted education appropriations still would have increased 1.8% from 2023. Although national-level education appropriations have consistently grown since 2019, 22 states continue funding higher education at a lower level than prior to the Great Recession.
  • State public financial aid per FTE increased 4.8% from 2023 to 2024 and reached an all-time high of $1,155 per FTE enrolled student. These funds made up 9.9% of all education appropriations. Financial aid per FTE increased in 31 states in the last year.
  • Inflation-adjusted net tuition revenue decreased 3.7% in 2024 and has declined 8.1% in the last five years. Public institutions received $7,510 per FTE in net tuition and fee revenue in 2024. Public institutions in 40 states and Washington, D.C., collected less tuition revenue than they did five years ago. Decreases in net tuition revenue are largely due to increases in state financial aid and minimal tuition rate growth (lower than the rate of inflation). Despite recent declines, since 1980, net tuition revenue per FTE has increased in every state and has increased by more than 100% in 41 states.
  • Total education revenue decreased 1.0% from 2023 to 2024, reaching $19,092 per FTE. This marks only the second decline since 2013, the other being a 0.2% decrease from 2022 to 2023. Excluding federal stimulus funding, and if enrollment had held constant, total education revenue per FTE would have decreased 5.5% from 2023, but increased 0.5% from 2019. 
  • For the first time since 2010, the U.S. average student share dropped below 40%, decreasing to 39.3% in 2024. Thirty-two states saw declines, but student tuition and fees funding public higher education still comprised more than 50% of total revenues in 19 states. Continued increases in education appropriations and declines in net tuition revenue have reduced the proportion of total revenue financed by students. 

As these findings demonstrate, fiscal year 2024 showed only small growth in education appropriations and the first increase in FTE enrollment since 2011. The continued decline in net tuition revenue puts greater pressure on states to continue investing in public higher education in the coming years. As federal stimulus funds run out, some states may face difficult budgetary decisions.

“We are encouraged by the recent increase in enrollment and the impactful increase in state financial aid investments. With uncertainty on the horizon for federal and state budgets alike, we know states will be under greater pressure to fund higher education,” said SHEEO President Robert E. Anderson. “While each state is facing its own unique circumstances, we hope lawmakers will continue to view public higher education as an investment in their state’s future workforce.” 

The SHEF report broadly addresses the wide variation in how states fund public higher education. However, state-specific context is incredibly important when discussing higher education finance trends. “The trends detailed in the SHEF report reflect national and state averages, but there are almost always outliers in every trend. Even within states, there can be wide variation in the enrollment and revenue patterns at each institution,” said Kelsey Kunkle, Senior Policy Analyst at SHEEO and co-author of the report. “Nationally, 2024 showed slow growth, reinforcing the need for long-term, sustained investments as states explore new or different ways to address college affordability, educational quality, and inequality in educational attainment.”

The full SHEF report paints a more complete picture of differences in public higher education finance across states.

Explore the SHEF website to read the full report and customize the interactive data visualizations, including individual state profiles. Look for more data from SHEF to be added to the website in the coming months. 

Annual Grapevine Data show initial 4.3% increase in state support for higher education

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Data reported by states in the latest Grapevine survey indicate that initially approved state support for higher education in fiscal year (FY) 2025 reached $129.1 billion, a 4.3% increase over 2024.[1] This is the fourth year state fiscal support for all higher education has topped $100 billion. This increase reflects a 32.9% increase over the past five years. Tax appropriations, non-tax support, non-appropriated support, and returns from state-funded endowments make up total state support. The Grapevine report provides a first, tentative look at state higher education funding in the new fiscal year. However, an important caveat is that the Grapevine data do not account for inflation.[2]

States allocated 2.2% more federal funding to support higher education than in FY 2024. The additional $637.9 million in federal stimulus funding brings the total state fiscal support for higher education in FY 2025 to $129.7 billion.[3]Since 2020, states have allocated more than $10 billion in federal stimulus to higher education.

Grapevine data are collected annually by the State Higher Education Executive Officers Association (SHEEO). The FY 2025 data represent initial allocations and estimates reported by the states from October 2024 through January 2025 and are subject to change. 

Excluding federal stimulus dollars, seven states saw increases of at least 10% since 2024. Including federal stimulus, six states saw increases greater than 10%. Only two of those states, Nebraska and Kansas, saw increases greater than 15%, both with and without federal stimulus.[4] Eleven states reported an overall decline in state support, including federal stimulus funding, between 2024 and 2025. Nine states had one-year declines excluding federal stimulus. 

The Grapevine tables include data on how total higher education state support allocations were used across two-year public operating, four-year public operating, state financial aid, research, and other uses for FY 2025. While state allocations across each area are not final and include estimates for several states, initial appropriations to each area were as follows: 

  • $27.6 billion to two-year public operating.
  • $62.5 billion to four-year public operating.
  • $16.1 billion to state financial aid for all students. 
  • $14.4 billion to research, agriculture extension, hospital extension and medical schools.
  • $8.5 billion to other uses, including agency funding, private institution operations, and non-credit appropriations. 

The full Grapevine report, including tables summarizing the results of the FY 2025 Grapevine survey and a complete dataset of state support for higher education going back to 1980, can be found on the SHEEO State Higher Education Finance (SHEF) website at https://shef.sheeo.org/grapevine. 

[1] FY 2025 marks the ninth year Grapevine has included Washington, D.C., in its survey. Washington, D.C., is excluded from all state counts and U.S. totals. The data reported by the District of Columbia, including federal stimulus funding, reveal a 0.9% increase in the last year. However, including federal stimulus, support has decreased by 9.5% since 2020.

[2] While actual inflation data are not available for FY 2025, forecasts suggest the U.S. will face 2.1% inflation over FY 2024. Source: OECD Economic Outlook: Statistics and Projections, Inflation Forecast Indicator https://data.oecd.org/price/inflation-forecast.htm.

[3] Federal stimulus funding was awarded to states for higher education to stabilize state and local sources of funding, and to provide additional resources during COVID-19. Federal stimulus funding excludes funds allocated to public capital projects and any funds (such as HEERF) allocated directly by the federal government to institutions or students.

[4] In 2025, Nebraska replaced local property taxes for community college operations with state appropriations.

For the first time, state funding to public colleges exceeds per-student funding levels seen prior to the Great Recession

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The latest State Higher Education Finance (SHEF) report finds that in 2022, public higher education appropriations increased 4.9% beyond inflation, surpassing pre-recession per-student funding levels for the first time since 2008. The SHEF report also finds that fiscal year 2022 saw the second largest public FTE enrollment decline since the start of the SHEF dataset in 1980, and tuition revenue continued to decline.

After a short recession in 2020 due to the COVID-19 pandemic, historical patterns following economic recessions reversed in 2021 and 2022. Instead of the typical decrease in state funding following a recession, education appropriations increased for the 10th straight year, rising $932 per full-time equivalent (FTE) from 2020 to 2022. Inflation-adjusted education appropriations per FTE were greater than pre-recession funding levels in 2008, by 3.1% or $304 per FTE. The increase in education appropriations per FTE can be attributed to three notable trends:  increasing state commitments to higher education funding, a sharp decline in FTE enrollment, and generous federal stimulus funding.[1]

Additional findings from this year’s report include:

  • Public FTE enrollment has now declined for 11 straight years to 10.31 million in 2022, down 2.5% since 2021, and down 11.6% from an enrollment peak in 2011. Public institutions have lost almost all the additional FTE enrollment they gained following the Great Recession, and in 2022, FTE enrollment was just 0.4% higher than in 2008. The two-year sector generally had larger enrollment declines across states, taking a larger hit than four-year enrollment in 31 states.
  • State and local government funding for higher education totaled $120.7 billion in fiscal year 2022, including more than $2.5 billion (2.1%) in federal stimulus funding. Inflation-adjusted federal stimulus funding for higher education declined $1.4 billion or 36.4% from fiscal year 2021. Two-year institutions received $55 per FTE in federal stimulus for public operating in 2022, while four-year institutions received $169 per FTE.
  • Education appropriations increased 3.8% at two-year institutions and 4.0% at four-year institutions. Without federal stimulus funding directed by states to higher education and without the decline in FTE enrollment, inflation-adjusted education appropriations still would have increased 3.6% from 2021 and 2.9% from 2020. Although national-level education appropriations have recovered to 2008 levels, 28 states continue funding higher education at a lower level than prior to the Great Recession.
  • State public financial aid per FTE increased 2.0% from 2021 to 2022 and reached an all-time high of $990 per FTE enrolled student. These funds made up 9.7% of all education appropriations. Financial aid per FTE increased in 29 states and Washington, D.C., in the last year. More than twice the amount of state financial aid was awarded to students attending four-year institutions than students at two-year institutions.
  • Inflation-adjusted net tuition revenue decreased 1.0% in 2022 and has declined 5.8% in the last five years. Public institutions received $7,244 per FTE in net tuition and fee revenue in 2022. Public institutions in more than half of all states collected less tuition revenue than they did five years ago. Decreases in net tuition revenue are largely due to increases in state financial aid and minimal tuition rate growth (lower than the rate of inflation). Declines in the last year were significantly worse in the two-year sector: Net tuition revenue per FTE declined 7.4% at two- year institutions and only 0.2% at four-year institutions. Despite recent declines, since 1980, net tuition revenue per FTE has increased in every state and has increased by more than 100% in 44 states.
  • Total education revenue increased 2.4% from 2021 to 2022, reaching an all-time high of $17,393 per FTE. However, total education revenue is at an all-time high in only 11 states, and many institutions are not at an all-time high for total education revenue. Additionally, the increase in total education revenue since the start of the COVID-19 pandemic is explained by federal stimulus funding and the enrollment decline. Excluding federal stimulus funding, and if enrollment had held constant at 2020 levels, total education revenue per FTE would have declined 2.4% from 2020 to 2022. 
  • The student share decreased from 43.1% in 2021 to 41.7% in 2022, and for the first time since 2016, the student tuition and fees funding public higher education comprised less than 50% of total revenues in more than half of all states and Washington, D.C., even after excluding federal stimulus funding. Continued increases in education appropriations and declines in net tuition revenue have reduced the proportion of total revenue financed by students. As states are faced with fewer federal stimulus dollars amidst increasing concerns about student affordability and student loan debt, states must make conscious efforts to continue decreasing the portion of public higher education funded by students and families.

As these findings demonstrate, fiscal year 2022 defied several long-term trends in higher education finance and showed growth in education appropriations. The continued decline in net tuition revenue puts greater pressure on states to not cut funding to public higher education in the coming years. When federal stimulus funds run out, states will face difficult budgetary decisions, and higher education may face cuts in some states.

SHEEO President Robert E. Anderson shared, “We’re pleased to see additional increases in state support for higher education, demonstrating a commitment in many states to fund their public institutions. While we see per-student funding levels come back to pre-Great Recession levels, there is still a long way to go in helping students access and succeed in higher education. The student share continues to draw concerns, and we hope these data help states see areas of improvement and continued opportunities of support for students.”

The SHEF report broadly addresses the wide variation in how states fund public higher education. However, state-specific context is incredibly important when discussing higher education finance trends. “The trends detailed in the SHEF report reflect national and state averages, but there are almost always outliers in every trend. Even within states, there can be wide variation in the enrollment and revenue patterns at each institution,” said Kelsey Kunkle, policy analyst at SHEEO and primary author of the report. “We know that state funding and institutional revenue impact student outcomes, and the negative impacts of low and unequal institutional revenues disproportionately affect students of color and low-income students.”

The full SHEF report paints a more complete picture of differences in public higher education finance across states.

Explore the SHEF website to read the full report and customize the interactive data visualizations. The SHEF website also includes individual state profiles, an additional report on state effort and capacity to fund higher education, and data resources exploring additional higher education finance topics like student residency, performance-based funding, and capital appropriations.

 

About SHEEO

The State Higher Education Executive Officers Association (SHEEO) serves the executives of statewide governing, policy, and coordinating boards of postsecondary education and their staffs. Founded in 1954, SHEEO promotes an environment that values higher education and its role in ensuring the equitable education of all Americans, regardless of race/ethnicity, gender, or socioeconomic factors. Together with its members, SHEEO aims to achieve this vision by equipping state higher education executive officers and their staffs with the tools to effectively advance the value of higher education, promoting public policies and academic practices that enable all Americans to achieve success in the 21st century, and serving as an advocate for state higher education leadership. For more information, visit sheeo.org.

Media Contact

Jessica Duren, Strategic Communications Director, jduren@sheeo.org

[1] Federal stimulus funding allocated to states due to the COVID-19 pandemic is included in education appropriations and total education revenue throughout the SHEF report. Federal stimulus funding contributed to the education appropriations increase in two ways. First, federal funds that protected state revenues and covered additional costs due to the COVID-19 pandemic and economic recession reduced the need to redirect funds from higher education to other budget areas during the pandemic. Second, federal funds given to states and used for higher education operations boosted education operating appropriations.