A decade of rising tuition, inadequate need-based financial aid

and mounting student debt in Kentucky

 A decade of state budget cuts in higher education, rising tuition, underfunded need-based financial aid and stagnating incomes are combining to make higher education less affordable for Kentucky students, according to a new report by the Kentucky Center for Economic Policy (KCEP). 

“Everyone agrees that higher education is essential to growing our economy and improving our quality of life,” said KCEP director Jason Bailey. “Yet educational attainment in the state remains too low, and many who start out in postsecondary education do not complete their degrees. More and more, affordability is a barrier to Kentuckians getting the skills they need.” 

The report documents a series of shifts in responsibility for the costs of higher education over the last ten years. Cuts in state appropriations have led to higher student tuition rates. Financial aid programs have not picked up the slack, particularly for the neediest students. The state has prioritized merit-based aid and tax credit programs that do more to help those with higher incomes, while two-thirds of those who qualify for the state’s main need-based financial aid program are denied assistance because of a lack of funds. 

Meanwhile, the affordability challenge is compounded by the declining purchasing power of the federal Pell Grant and the lack of wage growth in Kentucky. Real median wages in the state were 3.5 percent lower in 2010 than they were ten years earlier. 

“The result of these trends is higher student debt,” said Bailey. “While enrollment at public universities and community colleges in Kentucky grew 35 percent over the past ten years, the amount of student loans grew 238 percent. Even when students get a degree, their debt load limits their ability to start a business, own a home or save for their own kids’ education.” 

Low-income adult students face a special challenge. Well over a million Kentucky adults lack a postsecondary degree. Yet costs are a significant barrier to these students, who too often don’t meet the qualifications of existing financial aid programs. 

Report recommendations emphasize the need to: fully fund the need-based College Access Program including by shifting some funds away from tax credits; increase effort to provide aid to low-income adult students; and halt the decline in per student state appropriations to higher education institutions by addressing underlying problems with Kentucky’s tax system. 

The full report can be accessed at www.kypolicy.org. 

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The Kentucky Center for Economic Policy is a non-profit, non-partisan initiative that conducts research, analysis and education on important policy issues facing the Commonwealth. Launched in 2011, the Center is a project of the Mountain Association for Community Economic Development (MACED). Support for this report comes from the Working Poor Families Project. For more information, please visit KCEP’s website at www.kypolicy.org.

Jason Bailey

Director

Kentucky Center for Economic Policy (KCEP)

433 Chestnut Street

Berea, KY 40403

Ph:  859 986 2373