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November 9, 2006

The Facts on Federal Education Spending

EDUCATION NOTEBOOK: 
The Facts on Federal Education Spending

November 9, 2006

Sweeping victories in the midterm elections have put Democrats in charge of the 110th Congress.  After twelve years out of power, what will Democrats seek to accomplish in federal education policy? 

One common theme in their recommendations has been to increase spending on both K-12 and postsecondary education.  The Democratic Party's 2004 National Platform criticized President Bush for "breaking his word" on No Child Left Behind and "providing schools $27 billion less than he promised, literally leaving millions of children behind."  The platform also criticized the Bush administration for not providing enough federal funding for higher education and student loans, charging that "President Bush tried to charge more for student loans and eliminate Pell Grants for 84,000 students." 

Actually, federal education spending has grown dramatically over the past six years under President Bush and the Republican Congress.  But more importantly, whether it's Republicans or Democrats increasing federal funding, more federal dollars have not improved American education in recent decades. 

Consider K-12 education spending.  Annual U.S. Department of Education spending on elementary and secondary education has increased from $27.3 billion in 2001 to $38 billion in 2006, up by nearly 40 percent.  According to the department, annual spending on the Title I program to assist disadvantaged children grew by 45 percent between 2001 and 2006.  In 2007, the department will spend 59 percent more on special education programs than it did in 2001. 

Unfortunately, there's little reason to believe even these dramatic funding increases will lead to improvements in student learning in American schools.  Since the early 1970s, inflation-adjusted federal spending per pupil has doubled.  Over that period, student performance has not markedly improved, according to the long-term National Assessment of Educational Progress (NAEP), which is designed to measure historical trends. 

Under a Republican-controlled Congress, federal spending on higher education has increased almost as dramatically as K-12 spending over the past six years.  For example, annual Department of Education spending on federal Pell Grants grew from $8.7 billion in 2001 to $13 billion in 2006, nearly 50 percent growth.  The federal government spends considerably more on higher education today than it did during the Clinton administration.  According to the College Board, federal funding for higher education in 2004-2005 totaled $90 billion, a real increase of 103 percent over ten years. 

An increasing number of students receive federal subsidies for higher education.  For example, 5.3 million students received federal Pell Grants in 2005, an increase of 44 percent over ten years.  In all, in 2006 more than 10 million Americans will receive various federal subsidies for higher education. 

Unfortunately, as with K-12 spending, there's little evidence that federal spending on higher education is achieving its objective.  Quite simply, college tuition is becoming more expensive each year.  According to the College Board, the total cost of tuition and fees at four-year private and public colleges increased by 5.9 percent and 7.1 percent, respectively, during the 2005-06 school year. 

According to economist Richard Vedder, college tuition costs increased by 295 percent between 1982 and 2003, a growth rate higher than health care costs (195 percent), housing (84 percent), and all items (83 percent).  In his book, Going Broke By Degree: Why College Costs Too Much, Dr. Vedder argues that increased federal spending on higher education has contributed to rising tuition costs.  In other words, federal subsidies are not making higher education more affordable because colleges and universities simply consume this additional source of revenue.

These are important lessons that policymakers and taxpayers should keep in mind during the 110th Congress.  Calls for more funding for public schools and subsidies for college tuition may be popular on the campaign trail, but simply increasing federal funding for education is not the answer.  If it were, we should have seen better results by now.

Dan Lips is an Education Analyst at the Heritage Foundation www.Heritage.org.

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