How to keep students in state for college?

State funding, tuition discounts, says one economist

More students attend college in their home state when tuition discounts and state appropriations are higher, according to a new paper by the National Bureau of Economic Research.

John Kennan, an economist at the University of Wisconsin (UW) Madison, examined data from the National Longitudinal Study of Youth, which includes students' home states, college location, net tuition cost, and post-graduation income. The survey also reveals which students moved for college and for work.

Poorest states make biggest cuts to higher ed, signal national trend

Despite a fear of losing students for college, Kennan found that most students stick to their home state for college—and continue staying in state for work. However, he also estimated—observationally—that a 20% drop in tuition may lead to a 2% to 10% jump in college graduates living in the state.

What this means for colleges and universities

Increasingly, states have been working to keep high school seniors from leaving for college, Jeff Gua reports for Washington Post's "GovBeat" blog.

States have tried a range of tactics: in-state scholarships, in-state discounts at public colleges, and allocating more budget money to higher education to improve school quality. But at the same time, Gua writes, states are cutting funding for colleges in an effort to balance their budgets.

For example, a state budget proposal would cut the Louisiana State University (LSU) System's state support to just 2.9% of its total funding. LSU's system president says those cuts could mean 2,000 canceled classes, tuition increases, faculty layoffs—and possibly even bankruptcy for LSU.

According to Gua, Louisiana may be "driving away a valuable section of its future workforce" with the financial cuts. Currently, 88% of residents remain in-state for college, but that could change in light of drastically reduced state funding.

Which states are popular among student residents?

The states where the most students stay in-state for college are:

1. Utah

2. Arizona

3. California

4. Texas

5. Michigan

In all five, about 90% of students remain in state.

Utah, Arizona, Iowa, and West Virginia also all have a large number of available spots compared with high school graduates looking to attend.

Meanwhile, California, Michigan, and Texas struggle to provide enough slots for their native students while also meeting the schools' financial needs with tuition from higher-paying out-of-state students.

The states with the lowest rates of students remaining in-state for college are:

46. Alaska

47. New Jersey

48. Connecticut

49. New Hampshire

50. Vermont

New Hampshire and Vermont have space for local students, but enrollment rates are low. About two-thirds of Vermont students come from out of state, according to Gua.

In contrast, 37% of students in New Jersey attend college out of state—possibly because it does not have room for 30% of high school seniors. The system would need to grow 44% to educate everyone, says Gua.

Similarly, Connecticut would need to expand capacity by 17% to accommodate all of its students (Gua, "GovBeat," Washington Post, 4/8).

The takeaway: A new paper in the National Bureau of Economic Research finds that increasing state funding to higher education and discounting tuition translates to a more highly educated workforce.

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