Financing Public Higher Education: Short-term and Long-term Challenges

Peter R. Orszag and
Peter R. Orszag Vice Chairman of Investment Banking, Managing Director, and Global Co-Head of Healthcare - Lazard
Thomas J. Kane
Thomas J. Kane Walter H. Gale Professor of Education and Economics - Harvard University

April 1, 2004

Public higher education in in crisis—again. Between 2002 and 2004, state governments reduced appropriations for higher education from $68.2 billion to $60.2 billion—a reduction of 4 percent in nominal terms and almost 10 percent after inflation (CSEP 2003). In a half a dozen states, the reduction exceeded 10 percent, even in nominal terms.

With the economy showing signs of improvement, public university presidents (at least the optimists among them) might be tempted to think that the present difficulties will soon pass. Yet although an economic recovery will relieve the short-term pressure, public higher education faces serious challenges ahead.

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