Ohio’s share of low-income students enrolled in colleges or universities increased by 22.2 percent between 2000 and 2010, the second largest increase in the nation.
However, need-based financial aid dropped precipitously at the end of the decade. Figure 4 shows that between 2005 and 2009, state need-based aid boosted the federal aid provided by the Pell Grant by almost a full third, but by 2013, state need-based aid to students with Pell grants provided less than a 5 percent boost. Cuts in federal aid now compound problems for Ohio’s low-income students.
These cuts could deepen: up to 2,000 work-study positions in Ohio could be eliminated by the sequester.
The current budget introduced the “Enterprise University Plan for Ohio,” which recommended substantial deregulation of Ohio’s higher education system and increased merit-based aid instead of need-based aid. Policy Matters looked at the impact of deregulation of higher education in other states, and found that deregulation did not increase college completion, make college affordable, or close the higher education gap. In many cases, deregulated states seemed to perform worse than the nation on indicators of accessible and affordable higher education. The focus on merit aid illustrates how a deregulated system — with less state support but also less regulation — will focus on the higher-income student, making merit aid the natural focus. Students from higher income communities with high property values and ample school funding are more likely to qualify for merit aid than students from lower income communities that lack the property tax base to fund enrichment courses and other performance-boosting opportunities. They also achieve timely completion with more ease than students who may struggle to balance work and study. Competition for students from wealthier families includes a focus on merit aid rather than need-based aid.
The Enterprise University Plan has not been implemented. The pending budget offers the opportunity for new approaches. The higher education system faces long term, systemic problems that need to be addressed with long term plans:
- Growing demand, declining need-based aid — Growing demand for higher education coincided with sharp declines in state support for public colleges and universities, across the nation and in Ohio. In 1991, Ohio dedicated $7.03 of every $1,000 in state personal income to higher education. This plunged to $6.30 in 2000 and to $4.57 in 2011, a 35 percent decline over 20 years, surpassing the 31 percent decline seen in the nation in the same period. Further, the dollar amount of need-based financial aid has plunged to its 1993 level in Ohio, not adjusted for inflation, even as tuition has risen sharply. Ohio’s de-funding of need-based aid has been extreme and at odds with a policy goal of encouraging higher education.
- Costly tuition and fees — Public colleges and universities have responded to sharp reductions in state allocations by increasing tuition and fees. Ohio’s public four-year institutions are the third most expensive in the nation relative to family income; our public two-years are the fifth most expensive. At $8,387 in 2010, Ohio’s in-state students pay $2,130 more than the average college student in the nation, while Ohio students at two-year colleges pay $411 more per year.
- Our higher education attainment rate is low — In 2010, just 26.7 percent of Ohio adults had at least a bachelor’s degree, compared to 29.9 percent of in the United States, ranking us 34th among states. Demand for higher education is growing: 32 percent more students enrolled in Ohio’s public colleges and universities in 2010 than in 1990. Unfortunately, this growth was lower than the nation as a whole, where enrollments grew by 52 percent in the same period. A growing percentage of jobs with middle-class compensation require some college. By 2018, the Board of Regents argues that 57 percent of Ohio jobs will require a college degree or coursework. Expanding higher education attainment requires attracting new student populations, especially those that have been under-represented in higher education traditionally. Chancellor Jim Petro, like Chancellor Eric Fingerhut before him, sets growth in college graduation rates as a top priority for Ohio, and the planning document, The Fourth Report on the Condition of Higher Education, identified students from moderate- and low-income backgrounds as a priority.
- Inequity in outcomes — An Ohio wishing to boost post-secondary attainment must encourage low and moderate-income students to pursue college. Higher education is not equally distributed. In 2011, a 24-year-old student born into the top quartile of family income was about seven times more likely to have earned a bachelor's degree than a 24-year-old born into the bottom quartile. Disinvestment in public support for higher education that leads to institutional focus on wealthier students works against a statewide goal of boosting completion on a state-wide basis.
Instead of reducing public control by deregulating, Ohio should do more to meet the demand for higher education, make it affordable for students from all backgrounds, to boost completion rates. Ohio students need fair, adequate and sustainable tax policy that would allow the state to provide sufficient support to higher education, both to ensure reasonable tuition and adequate need-based aid.
Executive summaryIntroductionBudget baselinePrivatizationLocal governmentK-12 educationHealth and human servicesWorkforce and trainingTax policySummary and recommendations
 Post Secondary Education Opportunity, “Students from Low Income Families and Post-Secondary Education Opportunity by State,” March 2012 at http://www.postsecondary.org/last12/237_312pg1_20.pdf.
 Carol Biliczky, “Changes in federal laws affect Pell grant recipients’ college funding,” Akron Beacon Journal (Ohio.com) 8/13/2012 at http://bit.ly/MXq4CX.
 Patton, “Budget Control Act of 2011” op.cit.
 This section is taken from Michelle Camou, “Deregulation and Higher Education: Potential imact on access, affordability and achievement in Ohio,” Policy Matters Ohio, September 2012 at http://bit.ly/14vJY30.