Higher Education Affordability & Finance

Our History & Expertise

NCHEMS has long been at the epicenter of the creation and use of data related to postsecondary education finance, beginning in the 1970s when one of the challenges facing states and institutions at the time was not having the ability to collect and compare higher education costs across state lines. Data comparing institutional costs were largely unavailable and, in instances when data were available, they showed large differences or apparent cost swings due to differences in the collection, definitions, and reporting. To address this challenge, NCHEMS wrote the first manuals for capturing information about higher education finances and developed the procedures institutions use to review finance data. Many of these procedures are still in use today and inform the collection of data for IPEDS.

Our Work Today

Today, the challenges of financing higher education for states, systems, institutions, and students are numerous, complex, and interwoven. At the national level, the share of public higher education financing is nearly equal between states and students. There is increased ambiguity around broader funding questions such as:

What is higher education’s role in impacting the public good?

Who should be educated and for what purpose?

Who is being left out?

Facing an erosion of public support and trust, and needing to maintain adequate funding levels, higher education is becoming unaffordable. NCHEMS has conceptualized an Institutional Funding Adequacy Framework framework for thinking about state funding levels. This new framework is aimed at ensuring that policymakers are fully aware of the impact of resource allocation decisions they are asked to make, what share of such costs the state should bear relative to student payments, and how those shares may need to differ across institutions based on their missions and the characteristics of their students. Visit our Insights & Updates blog to learn more about our Institutional Funding Adequacy Framework.

Policy Alignment

We recognize that financial challenges and our answers to them will have much to say about how competitive our nation remains. Crucially, states will need to align finance policy with changing demographics, including structuring funding supports for lower- and middle-income populations, adults, and the education providers that serve them. New ideas and new models for the education and training of these non-traditional students and learners will need funding support and room to grow productively.

The conceptual grounding in higher education finance that NCHEMS has developed over our long history and work in most of the states across the country sets us apart and enables us to link various concepts, lessons, ideas, and strategies when working with a state or an institution on finance and budgeting issues. Along with readily accessible conceptual models, we bring extensive data and analysis to the discussion, which we use as a basis for gathering deeper information from stakeholders.

Contextualized Solutions for Complex Problems

We take a lot of care to fully understand the conditions surrounding the problems. NCHEMS has a tremendous facility in finding workable solutions to contentious issues. We use these key approaches (from our Knowledge First Framework™) to educate, inform and be pragmatic in how we produce recommendations, so they have the best chance of being implemented. First and foremost, our work is focused on how our recommendations will impact students and state goals. Policies and solutions don’t exist in isolation. Any strategy or recommendation must work effectively with all conditions the state or institution is facing, and to the benefit of all students.

NCHEMS’ work in higher education finance has had a significant influence that can be seen indirectly or indirectly in the finance policies in use in many states. For example, NCHEMS staff developed a set of principles of good practice for designing and implementing performance funding approaches, and many states have since adapted these principles in the development of their funding models. We have also put forward a framework for establishing a minimum level of funding adequacy for public institutions. Today, NCHEMS is involved in assessing allocation models, and we have developed financial aid models for several states.

Postsecondary finance policies cannot be developed in isolation. In particular, the key financing levers available to states—institutional appropriations, tuition pricing, and state-funded financial aid—must work together effectively to ensure institutional health and student affordability. And all of these must be closely tied to the achievement of state goals. In particular, the lack of a common understanding of what it means for the college to be affordable is a major barrier to creating policies that can help students enroll and not become overburdened by too much debt. A recent study suggests that states will not meet their attainment goals without significant financial investment in their public higher education institutions. Additionally, the COVID-19 pandemic has had a disproportionate impact on low-income student enrollment.

Strategic Approaches

NCHEMS has worked to help a number of states adopt a strategic approach to monitoring and ensuring student affordability. For example, Nevada, Oregon, and Idaho have redesigned their financial aid programs with help from NCHEMS staff. A major project in Vermont in 2021 included a recommendation (currently in the process of being enacted into law) to develop a consistent, standardized approach to ensure lawmakers are better equipped to understand the consequences of their budgetary choices on student affordability.

We bring a rigorous data strategy to our work in order to paint a picture of affordability that is disaggregated by student characteristics. We use a broader context of institutional finance, pricing, and student populations. In addition, we are aware that the reliance on tuition revenue to fund public students has affordability consequences that differentially impact students, and the complexity of affordability issues go well beyond tuition.

Visit our Projects page to learn more about our extensive work and impact in finance & affordability.