Higher education can boost state economy but as aid drops, cost barrier rises

Formal higher education frequently opens the door to better wages — especially in Boston where employers are disproportionately likely to seek applicants with bachelors’ degree. But students attending public colleges and universities are now doing so at the cost of greater and greater debt, according to a new report from the Massachusetts Budget and Policy Center.

State scholarship support for low-income students to attend public colleges and universities has declined, as has state support for those schools’ operations in general, MassBudget says. Meanwhile, demand for public college and universities has risen during the same period. As such, students are increasingly forced to take out hefty loans.

Should state government reverse course and invest more heavily in public higher education, the benefit would likely be seen in the state economy. A study cited by MassBudget indicates that a greater share of students who graduate from the state’s public institutions stay and become part of the workforce than students who earn their degrees from private in-state institutions.

MassBudget President Noah Berger said increasing the education of a state’s workforce can uplift its economy.

“We see across country that having a well-educated workforce is critically important to having a strong high-wage economy,” Berger told the Banner in a phone interview. “The challenge for the state is to ensure it is both providing high quality pre-K education to 12 to prepare people for college and making sure college is affordable so people who work hard and get admitted can go and get an education that will be helpful for the rest of their lives.”

A state resident attending University of Massachusetts Boston fulltime for 2016-2017 paid tuition and mandatory fees totaling about $13,425, according to the university’s website. UMass Amherst estimates on its website that a fulltime in-state undergraduate student pays about $14,971 in tuition and fees along with an additional $11,897 for room and board, assuming a shared room and basic meal plan. For next year, the UMass Amherst estimates rise to $15,345 and $12,254.

Boston’s job scene

Boston has a greater share of jobs requiring bachelor’s degrees than the national average, according to a report released earlier this year from the city of Boston’s Office of Workforce Development and the Boston Planning and Development Agency. Authors predicted that by 2022, 41 percent of Boston jobs will require a bachelor’s degree, compared to 27 percent of jobs nationally.

Local employers seem also to prefer college-educated applicants, even in cases where the job may not require it, according to the city’s report. For example, report authors state that while one only needs to hold an associate’s degree to become certified as a registered nurse in the state, 80 percent of RNs employed in Boston hold bachelor’s degrees.

“A worker with only an associate’s degree may have difficulty finding employment in the field despite possessing the minimum necessary credential,” the BPDA-Office of Workforce Development report states.

Retaining an educated workforce

Facilitating attendance at public higher education institutions could capitalize on growing interest, and in turn, result in more local workers with degrees.

“Over the long term, there’s a very strong correlation between whether a state produces a lot of college graduates and whether its workforce has a lot of college graduates,” Berger said.

If the trend of greater and greater student debt continues, it is possible that in addition to burdening young adults, college debt may discourage younger children from pursuing education as avidly, Berger warned.

“It sends a message to younger kids that college is going to be hard to afford,” he said. “It may reduce the engagement of those kids if they fear they won’t be able to afford college even if they do well and get in”

Growing student burden

Students today are more likely take out college loans and to acquire greater levels of debt than in earlier years.

“Back in 2001, students paid for roughly one-third of higher education costs, whereas now they pay well over half,” states the report.

The number of students attending a four-year public colleges in Massachusetts who took out loans grew by 39 percent between 2001 and 2014, according to MassBudget. Borrowing students also ended up with a cumulative debt that was 55 percent higher — adjusted for inflation — than that of students in 2001. In 2014, the average debt for such a student was $29,038.

The state’s role

Rising student debt is paired with declining state support.

Direct state funding to support public colleges and universities was cut by 14 percent between fiscal years 2001 and 2017. Combined with an increased enrollment during that time period, this means per-pupil spending effectively dropped by 31 percent, according to MassBudget.

Meanwhile, the state’s funding for scholarships also plummeted by 31 percent over the same timeframe. The bulk of scholarship monies go to the MassGrant need-based grant program for low-income individuals. In 1988, this grant covered approximately 80 percent of a student’s tuition and fees; in 2013, the grant only went as far as 9 percent.

In part, this has resulted in institutions charging more from all students in order to raise funding for need-based financial aid to help fill the scholarship void and bolster their own budgets. Although tuition levels may have remained largely stable, mandatory fees have shot up.

“Combining all public institutions together, the state cut funding by about $3,000 per student since FY 2001 and tuition and fees have increased by about $4,000 per student,” states MassBudget.

State spending varies

While noting that the state budget has been constrained by the reduction in property tax rates, the MassBudget report author adds that a considerable number of other states with fewer potential resources spend more.

When considering the wealth available, Massachusetts ranks behind 42 other states for public higher education spending per $1,000 of the personal income, according to the report. Massachusetts also falls behind 20 other states when comparing how far state per pupil spending stretches, giving the local cost of living.