Financial Trends in Higher Education:The United States

Since 1990,privatization has been the dominant trend in American higher education. Universities now eagerly sponsor cooperative programs for educational research with corporations and engage in commercial activities.The fastest growing segment of this industry is for-profit,corporate universities.The growth of student financial aid in all its forms has transformed the economics of American higher education.For public and private institutions,privatization has meant increased exposure to market forces. This essay examines developments in the financing of American higher education through three lenses;macro-trends since 1990 in the era of privatization;data on changes during this period;and description of the impact of the current economic downturn on the public and private sectors. It first describes the basic trends in enrollments,revenues and expenditures in institutions of higher education.The steady growth in real tuition prices has shifted the financing of higher education from state support to students and their families.The substantial growth in student financial aid,especially federal student loans has made student financial aid fundamental to the financing of higher education in the United States.However,its impact has been different in the private,non-profit sector,in the public sector,and in the private,for-profit sector.Finally,privatization has assumed quite different dynamics in funding and shaping academic research.The sub- stantial autonomy of institutions of higher education in the United States has allowed them to adapt independently to changes in the sources and magnitudes of income, which has produced heightened responsiveness to market forces.