For individuals, the economic returns on a college degree are as high as ever. And despite the latest stock-market plunge, the previous unprecedented growth in endowments has created nest eggs far larger than anyone conceived even a few years ago. On the other hand, a pessimist could point out that a college degree doesn't create high standards of living for graduates so much as it helps them avoid the economic disadvantages of those without postsecondary training. Moreover, while enrollment in higher education may continue to hit record levels in the coming years, the majority of new students won't be able to afford high-priced colleges unless they receive substantial discounts off the sticker prices. Public institutions with substantial graduate programs and federal research dollars depend on tuition for just a quarter of their revenues.
Community colleges rely even less on tuition.
Many leaders of public institutions still have fresh memories of the tough budget battles occasioned by the relatively mild recession of the early 1990's. The federal budget is of prominent importance to the nearly 150 universities with substantial federal research grants and contracts. Federal spending accounts for an average of 19 percent of the revenues at public universities and 27 percent at private universities. Although the federal budget now has an ample surplus, the Bush administration's plans for large and sustained tax cuts, if enacted, would consume much of it. A sustained recession could then bring red ink to the federal ledger, which would probably spill over to government support for university research.