To return Michigan to prosperity, fund higher education

In today’s economy, it’s a perilous proposition for anyone to ignore the reality that for our youth, the best path to a middle-class job is through college, with a four-year degree a vital waypost.

That being true, it’s imperative that we take steps to recognize the vital role of our public universities in creating college graduates for Michigan, and for our state to reinvest in our talented students in a major way.

Let’s start with the data. Nationally, since 2010, the U.S. economy has added 11.6 million jobs. Of those, 72 percent went to those with a four-year degree or beyond. Here in Michigan, less than one-third of residents possess a four-year degree. Less than one percent of new jobs went to those with a high school diploma or less.

That means we are missing out on many well-paying jobs being created in America, and Michigan in particular. And make no mistake, if our state’s youth want to earn a good living, work steadily and not face frequent layoffs, they will need a four-year degree. According to the Bureau of Labor Statistics, the median weekly earnings of someone with a bachelor’s degree is $1,137, and the unemployment rate of those with a bachelor’s degree is 2.8 percent. By comparison, those with an associate degree or its equivalent are earning on average $798 a week, with an unemployment rate of 3.8 percent.

We know cutting taxes doesn’t help attract college graduates. We’ve cut our state’s effective tax rate by 25 percent since 2000 – cutting support for universities and cities along the way – and we have still lost population, particularly college graduates. The places attracting college graduates are cities such as Chicago and Minneapolis (which are not low-tax communities). Michigan’s failure to attract sufficient numbers of college graduates makes it more important than ever that we “home grow” our talent by making it possible for more state high school graduates to have access to affordable public universities.

The state’s higher education marketplace is speaking. From 2008 to 2016, enrollment at the state’s community colleges and private colleges fell by 15 percent. Meanwhile, they grew by one percent at Michigan’s public universities, even as the number of high school graduates was declining. That’s not enough to meet the demand for college graduates, and universities are pushing to get more students ready to enroll and succeed in achieving a four-year degree.

Those students attending public universities do their homework. They know that Michigan’s public universities have a similar or lower net cost of attendance (all costs minus financial aid) compared to others around the nation – and all have higher post-graduate earnings than the national average.

They know that our universities’ graduation rate, on average, is 66 percent, even though only 44 percent of our students attend full time. That’s better than in most states, and universities are not complacent about that figure. Each one is implementing new programs and using success strategies to increase that figure.

Some argue that because Michigan universities don’t graduate every student immediately, and every student doesn’t stay in Michigan, we shouldn’t support our universities. That’s not a very strategic look at the situation. A recent review of students graduating from Michigan Technological University found that the state income tax paid just by its most recent class of graduates more than offset the increase in state appropriations the university received. In other words, state tax dollars invested in higher education have a real, quick, and tangible return on investment.

Despite this reality, Michigan has cut operating support for college students from $9,387 a year in 2000 (in 2017 dollars) to $5,217 per student today – a 44 percent drop. That’s forced universities to raise tuition, and cut back on programs in certain areas. This state-to-student cost shift in paying for a public college education in Michigan has resulted in higher “sticker price” tuition rates, and ultimately, student loan debt levels.

One of the reasons less than half of our students attend college full-time is this lack of financial assistance. The state of Michigan slashed its need-based financial aid to students while it also cut operating support, in turn putting the onus on public universities to allocate huge sums toward financial aid to ensure college access to low- and middle-income families. The state’s nonpartisan House Fiscal Agency even published a report showing that tuition increases are entirely explainable by state funding reductions, institutional financial aid increases, and inflation.

Michigan today ranks 32nd in the nation in the share of college graduates in its population. It also ranks 32nd in the nation in per capita income. The two numbers are inextricably linked.

If we want to put our state back on the path to prosperity, the best strategy is to prepare, retain, and attract college graduates. Given the difficulty we have had in attracting adequate levels of talent required to power Michigan’s economy, the state’s wisest policy would be to redouble investment in our state’s college students and in its public universities.