Higher Education Funding in New Jersey: How Do We Match Up?

For years, we have been arguing that public higher education has been systematically underfunded, contributing to the high cost of tuition in New Jersey. Is this a widespread problem or is New Jersey a special case? Thanks to the Chronicle of Higher Education’s Almanac for 2014-15, this question can be definitively answered.

Comparing New Jersey to six nearby states (Connecticut, Delaware, Maryland, New York and Pennsylvania,) here is what we found.

Average Tuition and Fees: Tuition and fees in NJ are the second highest among the six (averaging nearly $12,000) exceeded only by Pennsylvania. There are ten NJ public institutions of higher education listed among the 50 most expensive colleges (combining tuition, fees, room and board), including six of our own. From the most to the least expensive within the top 50 they are: The College of New Jersey, Montclair State University, Ramapo College, Rowan University, Richard Stockton College and Kean University.

Note: For fall 2014, average tuition and fees in NJ’s public senior institutions are over $12, 500.

Per Capita State Funds for Higher Education Operating Expenses: New Jersey ranks five out of six. (Only Pennsylvania is lower.)

State Spending on Financial Aid: Financial aid is proportionally higher in New Jersey than any other state by a significant margin. But fully one third of financial aid in NJ is in the form of “non-grant aid” i.e. primarily loans, with only Connecticut doing worse. Further our state spending on financial aid appears high only because our state funding for higher education operating expenses is low.

Per Capita State Spending on Higher Education Operating Expenses + State Spending on Financial Aid: New Jersey ranks four out of six. (Pennsylvania and Delaware are lower, but more of their financial aid is in grants.)

The best comparison is with Maryland. It is a state with nearly the same per capita income and poverty rate, and closest in population to New Jersey. Its average annual tuition + fees is about $7500 and its funding for higher education is much higher per capita than New Jersey, even when financial aid is factored in. And only 5.8% of its financial aid is in “non-grant aid” compared to 33% for New Jersey. Or to put it differently, 94.2% of Maryland’s financial aid to students consists of grants compared to only 67% here.

It is significant that Maryland puts over 90% of its higher education funding into operating expenses and less than 10% into financial aid, whereas in New Jersey the proportion of direct funding to financial aid is 72% to 28%. New Jersey uses a “high tuition/high aid” model; Maryland a “low tuition/low aid” model. The result? Maryland is #1 in per capita spending on higher education, not counting financial aid and #2 when counting financial aid.

Closer to home, tuition and fees in New York are just over $6,000, by far the lowest of the six states. With about twice the population of New Jersey, New York spends two and half times more on higher education. As a result, New York is #2 in per capita spending on higher education, not counting financial aid, and #1 counting financial aid. Furthermore, its financial aid is far superior to New Jersey’s in that only 6.3% of it is in “nongrant aid,” leaving 93.7 % in grants, compared to 67% in New Jersey.

Nationally, New Jersey is well above the average in tuition and fees. It is well below the average in state funds appropriated to higher education per capita and slightly above the average in state funds appropriated to higher education per capita when financial aid is included. But this figure is deceptive because nationally 85% of financial aid is in the form of grants, whereas in New Jersey, as previously noted, it is 67%, with the rest primarily in loans. Over-reliance on student loans, as is well known, exacerbates the student debt crisis.

The Washington Monthly, an independent magazine covering politics, government, culture and the media provides another means of comparison, based on criteria including tuition, percentage of students receiving Pell Grants and graduation rates, that it call “Best Bang for the Buck.” Among the 125 public institutions of higher education that it ranks, the only New Jersey institutions that make it into the top 50 are Rutgers-Camden and Rutgers-Newark.  In contrast, eight colleges/universities in the CUNY and SUNY system make the cut. The Washington Monthly also provides a “Contribution to the Public Good” comparison based on criteria including recruitment and retention of low income students, research and public service.  Among Master’s degree granting institutions, New Jersey ranks lower than New York, Pennsylvania and Maryland. 

So how does New Jersey match up to nearby states and the nation as a whole? Higher tuition. Lower per capita funding.  Financial aid consisting of fewer grants and more loans. Less value for the dollar. Weak in giving back to the community.

You judge.

Sources: The Chronicle of Higher Education 2014-15 Almanac Its data on tuition and fees is from 2011-2012, data on state funding from 2013-2014 and data on state spending on financial aid from 2012-2013.

Washington Monthly College Guide 2014

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