The Great Cost Shift Continues: State Higher Education Funding After the Recession

As student debt continues to climb, it's important to understand how our once debt-free system of public universities and colleges has been transformed into a system in which most students borrow, and at increasingly higher amounts. In less than a generation, our nation's higher education system has become a debt-for-diploma system -- more than seven out of 10 college seniors now borrow to pay for college and graduate with an average debt of $29,400. Up until about two decades ago, state funding ensured college tuition remained within reach for most middle-class families, and financial aid provided extra support to ensure lower-income students could afford the costs of college. As Demos chronicled in its first report in the series, this compact began to unravel as states disinvested in higher education during economic downturns but were unable, or unwilling, to restore funding levels during times of economic expansion. Today, as a result, public colleges and universities rely on tuition to fund an ever-increasing share of their operating expenses. And students and their families rely more and more on debt to meet those rising tuition costs. Nationally, revenue from tuition paid for 44 percent of all operating expenses of public colleges and universities in 2012, the highest share ever. A quarter century ago, the share was just 20 percent. This shift -- from a collective funding of higher education to one borne increasingly by individuals -- has come at the very same time that low- and middle-income households experienced stagnant or declining household income. The Great Recession intensified these trends, leading to unprecedented declines in state funding for higher education and steep tuition increases.This brief updates our previous analysis of state funding trends by examining trends in state funding and tuition since the Great Recession

Stuck: Young America's Persistent Job Crisis

Young adults are in a critical period of change and choices, as they confront the decisions that will pave the way to their futures. But the generation coming into its own in the aftermath of the Great Recession faces challenges that threaten to undermine even the best laid plans. Demos investigated the Bureau of Labor Statistics data for young adults in 2012 in order to see how the experience of young people today affects their prospects for tomorrow. This report found that last year passed with no significant gains for young people, who continue to endure a jobs crisis even as the economy recovers. The latest numbers from 2013 reveal no significant change in the trend. Without policy targeted to the needs of young adults, America risks a generation marked by the insecurities of the Great Recession for the rest of their working lives.

Who Pays?: The Winners and Losers of Credit Card Deregulation

It has been nearly two decades since the credit card industry was deregulated with the promise of bringing greater competition and lower prices to consumers. Under the shield of deregulation, credit card companies have shifted the cost of credit to individuals least able to afford it. As this report shows, low-income individuals, African Americans, Latinos and single females bear the brunt of the cost of credit card deregulation through excessive fees and high interest rates

The Economic State of Young America

The Economic State of Young America is a comprehensive databook offering proof that a combination of declining incomes, growing debt, and high costs of education, homeownership and healthcare are conspiring to make this generation the first to not surpass the living standards of their parents. The report examines the financial condition of today's young adults across key economic indicators, including jobs and income, debt and savings, college access and attainment, and housing affordability

By a Thread: The New Experience of America's Middle Class

Developed in collaboration with the Institute on Assets and Social Policy at Brandeis University, By a Thread: The New Experience of America's Middle Class looks at the financial security of the middle class using the innovative Middle Class Security Index, rating household stability across five core economic factors: assets, educational achievement, housing costs, budget and healthcare. The Index provides a comprehensive portrait of how well middle-class families are faring in each of these areas, with spotlight on the strengths and vulnerabilities of today's middle class

Economic (In)Security: The Experience of the African-American and Latino Middle Classes

As the next installment in the By a Thread series, Economic (In)Security uses the Middle Class Security Index to provide the first comprehensive portrait of the level of financial security enjoyed by African-American and Latino middle-class families. The findings show that, in the wake of fading economic opportunity, these two rapidly growing groups face mounting obstacles in becoming part of, and remaining securely in, America's middle class

From Middle to Shaky Ground: The Economic Decline of America's Middle Class

A middle-class standard of living requires that families have adequate financial security to meet current obligations, invest in the future, and access opportunities. The most recent findings from the Middle Class Security Index show that between 2000 and 2006--even before the most recent economic downturn--the economic well-being of middle-class families slipped noticeably.Between 2000 and 2006 an estimated 4 million middle-class families lost their financial security, bringing the total number of middle-income families on shaky ground to 23 million.These worrisome changes in the overall financial health of the middle class were driven by a decline in assets, rising housing costs, and a growing lack of health insurance

Understanding the Federal Deficit and the National Debt

Concerns about rising budget deficits have been on the political scene for decades. More recently these concerns have reappeared, as tax cuts and the costs of two wars transformed budget surpluses left by President Clinton into deficits in the early 2000s, while foreseeable long-term challenges approached. More recently, the recession has increased the short-term deficit to historic levels, though they will come down as the economy recovers. The current federal debt, which has risen sharply as tax cuts were phased in over a decade, security spending soared, and the nation was devastated by the financial crisis, is at its highest level since 1952, when the country was still repaying debt incurred during World War II. However, sharp increases in deficits and debt are common during economic downturns due to declines in tax receipts and additional federal spending to ameliorate the negative effects of a recession. Similarly, the deficit and national debt are most commonly measured as a share of the economy, so a shrinking economy also makes the fiscal outlook worse. The current debate over our nation's fiscal future is, however, conflating large short-term deficits, which will drop significantly after the recession, with the longer-term outlook for rising debt which is driven by escalating health care costs and an antiquated revenue code. Understanding the difference between short-term cyclical effects and long-term structural imbalances -- and the main factors of each type of shortfall -- is critical to adopting the right policy response. This short brief will give an overview of the concepts of the deficit and public debt, their causes and impacts on the national economy, and the appropriate policy options to address them in the short-, medium-, and long-term

Less Debt, More Equity: Lowering Student Debt While Closing the Black-White Wealth Gap

The dramatic increase in wealth inequality over the past several decades now forms the backdrop for many of today's most pressing public policy debates. Currently, the top 1 percent of U.S. households controls 42 percent of the nation's wealth, and nearly half of the wealth accumulated over the past 30 years has gone to the top 0.1 percent. Simultaneously, the wealth held by the bottom 90 percent of U.S. households continues to shrink, just as people of color are a growing percentage of the U.S. population. These trends have converged to produce a wealth divide that is apparent not just by class, but by race as well. The average white family owns $13 for every$1 owned by a typical Black family, and $10 for every$1 owned by the typical Latino family.This analysis uses the Racial Wealth Audit, a framework developed by the Institute on Assets and Social Policy (IASP) to assess the impact of public policy on the wealth gap between white and Black households. We use the framework to model the impact of various student debt relief policies to identify the approaches most likely to reduce inequities in wealth by race, as opposed to exacerbating existing inequities. We focus specifically on the Black-white wealth gap both because of the historic roots of inequality described above, and because student debt (in the form of borrowing rates and levels) seems to be contributing to wealth disparities between Black and white young adults, in particular

The racial wealth gap: Why policy matters

s the United States rapidly becomes both a more diverse and unequal nation, policymakers face the urgent challenge of confronting growing wealth gaps by race and ethnicity. To create a more equitable and secure future, we must shift away from public policies that fuel and exacerbate racial disparities in wealth. But which policies can truly begin to reduce our country’s expanding racial divergences? Until now there has been no systematic analysis of the types of public policies that offer the most potential for reducing the racial wealth gap. This paper pioneers a new tool, the Racial Wealth AuditTM, and uses it to evaluate the impact of housing, education, and labor markets on the wealth gap between white, Black, and Latino households and assesses how far policies that equalize outcomes in these areas could go toward reducing the gap. Drawing on data from the nationally representative Survey of Income and Program Participation (SIPP) collected in 2011, the analysis tests how current racial disparities in wealth would be projected to change if key contributing factors to the racial wealth gap were equalized. Main findings: The U.S. racial wealth gap is substantial and is driven by public policy decisions; Eliminating disparities in homeownership rates and returns would substantially reduce the racial wealth gap; Eliminating disparities in college graduation and the return on a college degree would have a modest direct impact on the racial wealth gap; Eliminating disparities in income—and even more so, the wealth return on income—would substantially reduce the racial wealth gap