Maine is old and getting older. As deaths outpace births every year and more Mainers reach their 65th birthday than graduate from high school, the state enters a “demographic winter” that affects every aspect of our economy.
We collectively get older and the workforce shrinks, demand for goods and services drops, and entrepreneurs look elsewhere to start their businesses. Young people are forced to chase opportunity across state lines, making the problem even worse.
Nowhere is it more evident than the state’s public university system, which has struggled for years with declining enrollments and loss of tuition revenue as a result of these trends. There just aren’t enough kids.
There is no magic solution to a problem like this, but the University of Maine has come up with a novel idea that could make a difference.
Instead of sticking with the common practice of charging high tuition for out-of-state students, the university has experimented with offering qualified students from six states the equivalent of their home-state tuition to come to Orono.
In its first year, the “flagship match” program has resulted in commitments from an additional 392 out-of-state students to attend the school in the fall. That is 392 young people who want to come to Maine, who will get to know Mainers and who will establish relationships with Maine businesses. At the conclusion of their educations, these students may decide to stay here and start their families. Helping these student afford a UMaine education could pay dividends later in the form of a younger workforce.
The economic impact of out-of-state students was explored in a 2003 study by Jeffrey A. Groen of Cornell University and Michelle J. White of the University of California at San Diego.
They found that attending a public university in a given state increases the probability of a student living in that state after graduation. This is just as true for out-of-state students as in-state ones, and what Groen and White call “high-ability” students, regardless of where they come from, are more likely than their lower-achieving peers to live where they went to school.
Where these graduates settle is very important to the local economy. Groen and White cite research that shows college graduates are more likely than those without a degree to start new businesses and create jobs. College graduates earn higher incomes and pay more taxes. And wages of both high school and college graduates are higher in places where there is a higher share of college graduates in the labor force.
The two economists concluded that states do not benefit from discouraging out-of-state enrollment; rather, “we find that states in fact gain financially when public universities admit additional out-of-state students.”
The flagship match initiative is criticized by people who think that the tuition relief should be offered only for Maine students, but they are missing an important point. Most of the out-of-state students who would receive a discount would otherwise not be coming to Maine at all. Just as an airline lowers prices to avoid flying half-empty planes, getting some tuition from these students is better than getting nothing. Attracting out-of-state students makes UMaine a stronger institution in the near term and has a long-term payoff for the state.
The program is just getting underway, and it is far too soon to call it a success, although the initial results are very promising. University officials will keep tracking these students, and they will be able to see how many of them choose to live in Maine when they graduate.
If the program continues to attract a significant number of out-of-state students, it should be expanded to more than six Northeastern states, and it should drive a re-evaluation of the concept of out-of-state tuition at all of the university system’s campuses.
Maine needs to look at every way that it can add more young people to the workforce, and adjusting tuition rates at its public universities might be the best economic development investment that the state could make.
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