<p>Another relevant issue that hasn't been discussed so far on this thread is how state funding of public universities and colleges has been changing; and still another is how the state universities are governed.</p>
<p>To take the latter point first, some university systems are "unified" with a central bureaucracy that putatively helps to make the whole system more efficient and effiective (e.g.., SUNY), some are "tubs on own bottoms" (e.g., state of Michigan), and some are in between. In my opinion by far the strongest ones are "tubs on own bottoms" systems, which provide strong incentives for the individual campuses to develop independent sources of funding (not just tuition) and to compete effectively in the national higher educational marketplace. A lot more could be said about this but I think systems with a strong centralized management lead to widespread mediocracy of the system.</p>
<p>On the financial side, for many years there has been a trend toward decreasing state general fund support for higher education -- as a share of all costs. As a result, the campuses, especially those with "independent" taxing power, i.e., the ability to raise tuition without the need for central approval (by the system, the governor, or the legislature) have managed to maintain and improve their quality. Campuses with with strong research faculties have been able to obtain huge amounts of funding for research (in medicine, science, engineering, education, social science, etc.). And further they have been able to build endowment. These independent (i.e., non state budget) funds are what makes the University of Michigan great, not the diminishing share of the budget provided by the state budget. What makes it possible for UWis to attract a first-rate faculty, despite offering lower salaries than other universities of its class, is, among other things, WARF (Wisconsin Alumni Research Fund).</p>
<p>A consequence of this "disfunding" of the major state universities, of course, is rising tuition rates. In effect, however, the state universities are already gradually being "privatized" in the sense that a majority of their operating funds come from tuition and fees, grants and contracts, and endowment (development). Given the fiscal strains that the states have been going through over time, and in particular in the last couple of years, it's no surprise that in order to maintain quality and fulfill their various missions the universities have been raising tuition -- a lot. Some universities with a truly "national" pull, e.g., UNC, UMich, UVa (there are others) are able to get a bonus furthermore by charging even higher rates for out-of-state (OOS) students. While going after OOS students sometimes riles the state legislatures, and they may put formal or informal limits on the percentages (e.g., "informally" about 30% OOS for UMich), what this means is that stronger national universities can charge a higher average price.</p>
<p>As I posted earlier, I don't see any likelihood of an abolition of state funded universities. But we should be aware of what's already been happening with funding.</p>