Broken promise of mobility, The: higher education's funding impact on poverty and college debt

Abstract

Following findings of increased poverty over time among Coloradans with college experience, I estimate the impact of Higher Education spending on poverty and debt outcomes for groups of individuals who have completed at least their post-secondary bachelor's degree. I hypothesize that the current level of Higher Education funding at the state level has contributed to the growing poverty and student debt. Using regression models with state and year fixed effects for poverty and additional institution-level fixed effects for debt, I find that an increase of $1 in spending on per capita Higher Education would reduce poverty by 0.03% and debt by $1.18 per student each year. The reduction in debt per student would be both proactive in reducing future debt and contribute to reducing current debt every fiscal cycle. Additionally, the relationship between debt and state spending indicates that growth in GDP and median income would reduce both the poverty rate and personal debt for college graduates. The impact of state supports on debt, in particular, validates the hypothesis that state spending on post-secondary institutions is currently failing to address the shifting cost-benefit value of a degree.