The State of Higher Education in the Midwest. Chicago Fed Letter. Number 218

Home to several excellent universities and colleges, the Midwest has long benefited from the region's strong higher education system. However, with projected demographic changes and state support declines, institutions of higher learning face significant challenges in the years ahead. The author identifies two trends: (1) Increasing shift towards an older and more ethnically diverse student population; and (2) Eroding state financial support. Suggested responses include: (1) Pricing tuition closer to real resource cost and using additional financial aid to provide lower-income students with access to higher education; (2) Reducing the scope of services offered by colleges and universities; (3) Funding students, not institutions; (4) Linking funding more closely to performance; and (5) Limiting subsidies provided to the wealthiest institutions of higher education. (Contains 7 notes and 4 tables.)