22 March 2025
Introduction
Pennsylvania (PA) has long had a crucial need for long–term solutions to high costs in higher education. Some statistics that best outline this need include: A 2023 study found that not a single four–year higher education Institution in PA was deemed affordable, while 31% of the institutions nationwide met affordability standards [1]. PA ranks the fifth most expensive state in the country to pursue a college education, with average in-state tuition for both private and public colleges costing around $22,391––nationally the highest being Rhode Island at $33,230 on average for in-state tuition, the lowest being Wyoming at $3,468 for in–state tuition, and the national average being $16,692 per year [2]. Worst of all, PA is the worst ranked state in the country to pursue a higher education [3]!
Last year, Governor Shapiro and the state legislature touted some short term reforms to higher education through the passage of the 24-25 PA fiscal budget, including a 6%––$15.7 million increase in funding for community colleges, a 6%––$35.1 Million increase in funding for PASSHE schools (public higher education institutions), a $28 million scholarship fund for students pursuing a degree in a high–demand field, a $54 million increase to PHEAA student grants, a $5 million fund for a disadvantaged students’ scholarship, and the creation of the new PA State Higher Education Board––that acts as a watchdog for higher education in PA and the only long-term measure that plays a role in addressing college affordability [4].
This year, Governor Shapiro’s 25-26 PA fiscal year budget and Higher Education reform plan both outline some great first steps for higher education reform, through major investments and initiatives in higher education aimed to tackle this crisis [5][6].
Policies like integrating public and community colleges into a unified higher education system, producing 50,000 additional credentials that align degrees and scholarships with workforce needs, guaranteed affordability for median-income families, and a transparent funding formula. Yet, it lacks deeper sustainable structural reforms. While Governor Shapiro’s higher education plan and 25-26 PA fiscal year budget takes necessary first steps, Pennsylvania must implement deeper structural reforms to ensure long––term sustainable solutions for affordability for Pennsylvania’s pursuing a college education. Without a targeted policy approach to long–term higher education affordability, that includes long-term tuition cost controls, increasing investment in public institutions, long–term affordability funding mechanisms, and financial aid reforms, the state’s proposed solutions will only work to be a band–aid for the higher education affordability crisis in PA.
The Root of the Problem: Why is higher ed so expensive in Pennsylvania?
Several key factors drive PA’s college affordability crisis. Firstly, according to Keystone Research Center, a PA–based policy think tank, in 2023, PA ranked 47th in the nation for per capita investment in higher education, investing only $143 per capita in higher education––in comparison to the national average, at $288 per capita [7]. Secondly, PA has an overreliance on out-of-state tuition to cover institutional costs, the average out-of-state tuition in PA from 2023-2024 costed $24,059, in the 2024-25 academic year over 11.7% of higher education students in Pennsylvania were not residents of PA, with most out-of-state students attending from New Jersey, International origin, and New York [8][9]. Thirdly, PA has no policies that work to cap tuition increases, allowing universities to set tuition rates with little oversight from the state government, leading to tuition increases that often outpace inflation. Fourthly, PA has a complicated decentralized system of higher education governance and oversight, making it hard to implement cost-control measures and accountability standards for the state’s institutions. The current structure includes oversight from the newly formed PA Board of Higher Education, and from the PA Department of Education, with little teeth for either agency to produce effective oversight.
Understanding Pennsylvania’s Higher Education Oversight and Funding Mechanisms
Before discussing possible long–term solutions to our higher education crisis in PA, it is crucial to first understand the state’s role in oversight and funding of the different types of model’s higher education institutions follow in Pennsylvania. Public institutions are primarily funded and overseen by state and local government purview, institutions in PA like Slippery Rock and Kutztown follow this model. State–related institutions receive a large portion of their funding from PA yet operate independently leading to a lack of oversight from PA itself, universities like Pitt and Penn State follow this model. Private institutions rely solely on private funding sources like tuition, donations, and endowments, as a result the state government has little–to–no control over these institutions; institutions that follow this model include Carnegie Mellon and UPenn. In essence, the recently created PA State Higher Education Board has the MOST amount of auditory and enforcement powers––“teeth” ––over public institutions, SOME over state–related institutions, and minimal influence or authority over private institutions. However, in the case of all three types of institution, outside of funding, the Governor and State Legislature can leverage things like regulatory powers over things like accreditation, financial aid, and consumer protections laws; grants and tax incentives; and the negotiation of partnerships between institutions and public initiatives to encourage affordability across all types of institutions. The state legislature must weaponize a combination of their institutional, legislative, regulatory, and budgetary powers to achieve effective long–term higher education affordability solutions.
Long–Term Policy Solutions to Consider
Structural forms must be adopted to address PA’s higher education crisis for years to come. Governor Shapiro’s proposed 25-26 fiscal year budget proposes a 15% increase in investment for community and state funded universities, and a 5% increase in funding for state-related universities for the next five years. This approach can be enforced through legislative appropriations and performance–based funding models directly applying to public institutions, like those mentioned in Governor Shapiro’s higher education reform plan. By increasing and reforming state investment in higher education institutions by adopting a performance–based funding mechanism (like that of Tennessee and Indiana) that ties state higher-education funding, grants, and incentives to things like graduation rates, placement in the workforce after graduation, and affordability. By instituting a predictable and transparent formula for state higher education funding, incentivization, and grants–––tying both initiatives into a long–term plan that considers rising costs and inflation––PA could ensure that both funding, grants, and incentives are being awarded to institutions who prioritize cost efficiency and equitability. Applying the formula for funding, grant, and incentive awardance to mainly public institutions, partially state-related institutions, and applying the grant and incentive side of the mechanism to private institutions.
Through the control of institutional costs and improving transparency for higher education institutions, PA can work to slow rising costs. For public institutions, the PA State Higher Education Board can institute tuition increase limits tied to inflation, while requiring annual efficiency audits, ensuring that resources prioritize education over bureaucracy. For state–related institutions, PA can make state funding contingent on the transparent disclosure of costs and procurement of contracts, to prevent wasteful spending practices. For private institutions, the state can weaponize regulatory and appropriations powers to make tax benefits and institutional/student grants contingent on financial transparency––this approach incentivizes public––private cooperation through access to tax benefits and grants. Some may argue that funding models like those proposed above create disadvantages for underfunded institutions, however, not only do these models work to incentivize compliance with affordability measures, they work to identify problems at the institutional level and could take into account things like underfunding when developing these formulas.
Another area of affordability that must be addressed is financial aid awardance. For public institutions, Governor Shapiro’s Blueprint For Higher Education calls for an additional $1.1 billion in financial aid over five years for public institutions, prioritizing affordability for students whose families earn less than the median income do not pay any more than $1,000 per semester in tuition and fees at PASSHE universities and community colleges––enforced through the PA Department of Education’s financial aid programs. For state-related and private institutions, Governor Shapiro’s plan increases PHEAA state grants by $1,000 for qualifying students attending state-related and private institutions––enforced by tying eligibility for this funding to institutional compliance with affordability measures. Both plans could be replicated for years to come with a long-term model that––like our other solutions takes into account rising costs––automatically increasing grant amounts and eligibility requirements with a formula that takes into account rising costs and inflation rates.
In–state and out–of–state enrollment must also be balanced in a more efficient manner. For public intuitions, PA can mandate enrollment quotes instituting a ratio of in–state to out–of–state students, prioritizing PA residents. For state-related institutions, universities can be incentivized to enroll more in–state students through adjustments in funding and financial aid eligibility requirements. For private institutions, the state can offer grants and tax incentives for private institutions committed to enrolling a higher percentage of in–state students or by providing more financial aid to PA residents attending private institutions.
Most importantly, to ensure long–term higher education affordability solutions, PA must also ensure there are sustainable long–term mechanisms to fund these solutions. For public institutions and scholarship programs that benefit students from all institutional models, the PA State Higher Education Board can implement a dedicated portion of revenue streams like gaming revenue, marijuana industry revenue, and/or corporate tax contributions to ensure stable long–term funding for affordability measures. For, state–related institutions PA could introduce a public–private partnership program that encourages private sector investment in PA higher education institutions, through tax incentives for businesses that contribute to scholarship/grant funds or workforce–aligned training programs that expand beyond the traditional law enforcement, education, trades and medical apprenticeship/residency models into areas like social science, business, and other sectors critical to the Pennsylvania economy. For private institutions, PA can explore endowment growth strategies to encourage cooperation on affordability measures and financial stability through tax incentives and state–supported investment programs.
Conclusion
Pennsylvania’s higher education affordability crisis is not simply a funding issue––it is a structural problem that requires comprehensive long–term structural reforms. While Governor Shaprio’s proposed 2025-26 PA fiscal year budget and Blueprint for Higher Education policy agenda signal significant strides for addressing the higher education affordability crisis in PA, these policy measures must be coupled with reforms that prioritize accountability and efficiency to ensure long–term affordability for Pennsylvanians pursuing a college education. By solely focusing on increasing appropriations without accountability, inefficiencies in affordability will only see progress in the short term, and by simply instituting drastic cost–cutting measures the state risks compromising quality of education over affordability. Pennsylvania must pursue measures like those we have discussed in this paper, that call for a pragmatic approach to addressing the higher education affordability crisis by utilizing state governmental powers and institutional cooperation, while prioritizing a healthy balance of quality and affordability of education in PA. Through the appropriate implementation, oversight, and enforcement of these policies across the public, state–related, and private higher education institutional structure, PA can create a higher education system that is both accessible and fiscally responsible––for institutions, students, and their families alike––ensuring that future generations of Pennsylvanians are not priced out of the opportunity to pursue a quality––affordable education. Without bold and targeted policy action, Pennsylvania’s higher education system will continue pricing out students––undermining the very workforce and economic growth the state seeks to build.
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Works Cited
[1] National College Attainment Network, SHEEO, Federal Student Aid, and United States Census Bureau. “College Affordability in Pennsylvania,” 2023. https://cdn.ymaws.com/www.ncan.org/resource/resmgr/policyadvocacy/23stateprofiles/pennsylvania_state_affordabi.pdf.
[2] Campbell, Julia. “The Average Cost of College Tuition by State.” Move.org, September 8, 2023. https://www.move.org/college-tuition-costs-by-state/.
[3] US News. “Rankings: Education – States With the Best Education.” Accessed March 7, 2025. https://www.usnews.com/news/best-states/rankings/education.
[4] Commonwealth of Pennsylvania. “Governor Shapiro Leads Most Significant Reform and Investment in Higher Education in Decades to Give Every Pennsylvanian the Freedom to Chart Their Own Course and the Opportunity to Succeed,” n.d. https://www.pa.gov/governor/newsroom/2024-press-releases/governor-shapiro-leads-most-significant-reform-and-investment-in.html.
[5] “Education Budget,” Department of Education | Commonwealth of Pennsylvania, n.d., https://www.pa.gov/agencies/education/programs-and-services/schools/grants-and-funding/school-finances/education-budget.html.
[6] Shapiro Administration. “Blueprint Creating a World-Class Engine for a Prosperous Pennsylvania for Higher Education,” February 2024. https://www.governor.pa.gov/wp-content/uploads/2024/02/Shapiro-Administration_Blueprint-for-Higher-Education.pdf.
[7] Keystone Reserach Center. “ANALYSIS: PA House Budget Makes Vital Upgrades to 2023-24 Budget Proposal for Higher Education – KRC.” Penn BPC, June 15, 2023. https://keystoneresearch.org/research_publication/analysis-pa-house-budget-makes-vital-upgrades-to-2023-24-budget-proposal-for-higher-education/.
[8] CollegeTuitionCompare. “Financial Aid Comparison Between Pennsylvania Colleges,” n.d. https://www.collegetuitioncompare.com/compare/tables/?state=PA&factor=financial-aid.
[9] “Tableau,” n.d. https://viz.passhe.edu/t/Public/views/Enrollment-PublicFinal/System?%3Aembed=y&%3AisGuestRedirectFromVizportal=y.
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