Michael Hicks
I write often of the economic damage caused by the sharp decline of Hoosiers attending college. Most of that focuses on statewide effects. Because we are now a full decade into this problem, it is time to start talking about where in Indiana the worst economic damage will occur.
The college going rate in Indiana peaked in 2015 and has declined ever since. If there’s good news, it is that the declines have leveled out a bit in recent years, with Indiana sending kids to college at about 80 percent of the national rate. This puts us in the bottom five states nationally—closer to West Virginia than Illinois—in sending kids to college.
At the same time, the demand for workers is heavily skewed towards college graduates. Indeed, the U.S. has not created a single net job for people who haven’t been to college since 1992—the first year for which we have data.
Despite happy talk to the contrary, there’s no growing demand for trades. There are fewer jobs in the trades in Indiana today than at the turn of the century, and inflation-adjusted wages for those workers are lower now than when Bill Clinton was president. Vocational and trade education won’t replace the wage premium or labor market security of college, no matter how much we wish it to be so.
Almost all the internal migration of people within the U.S. is from places with low levels of educational attainment to places with high levels of educational attainment. This is true for people with graduate degrees, high school dropouts and everyone in between. This has been increasingly the case since the end of World War II, and the trend is accelerating.
These four facts spell doom for most of Indiana. But there’s at least one more dimension to the problem: Many Hoosier cities host colleges and universities that are at significant risk.
The decline in college attendance across Indiana has not been random. The number of Hoosiers attending out-of-state public colleges and universities has not changed since 2015. Also, the number of Hoosiers attending private universities has not changed since 2015. That means all the declining enrollment has occurred within public universities.
Within Indiana’s public universities, only Indiana University and Purdue University have managed to increase the number of in-state, first-year college students since 2015. This growth is just over 1,000 students, good news for those two communities.
Across Indiana’s other public four-year schools, first-year, in-state enrollment is down about 5,000 students. That is bad news for Indianapolis and Fort Wayne. It is disastrous news for Muncie, Terre Haute, Evansville and other smaller cities across the state.
Omitting Ball State, whose 2015 data is missing from the national database, Indiana’s major public universities lost more than 3,300 in-state, first-year students from 2015 to 2022. Over the same period, in-state private universities saw enrollment gains of about 100 students.
This points to the crux of the problem—state support for higher education.
Had Indiana continued to support higher education spending at the same share of GDP we did in the final years of the Mitch Daniels administration, we’d be spending almost $500 million more per year. I mention this only to note that declining educational attainment has a policy dimension to it. If it were just bad luck, or our slice of a national trend due to COVID-19, it would still be unwelcomed. It is worse than that.
The declining educational spending at state universities should be of big interest to elected officials in all the towns around public universities. It seems very likely to undo decades of hard work towards rebuilding these communities. Even if enrollment stabilizes, most state schools are about to see their rankings slip.
At the local level, we should be most worried that at least two public universities in Indiana will lose their designations as R2 Institutions, or Doctoral Universities with High Research Activity. Loss of this designation, which seems probable, will be especially damaging to universities in their roles as the economic engines of their host cities.
So, at first blush, all this would seem to be the problem of a few places, maybe a dozen cities in the state. But there’s a deeper problem that will be felt everywhere except perhaps the greater Indianapolis region.
Where students attend college affects the likelihood they remain in the state. Students who leave Indiana to attend college are very unlikely to return to build a life and career. Students who attend private universities inside Indiana are also unlikely to remain in Indiana.
The students who are most likely to remain in Indiana are those who attend public universities. And, among public universities, the ones with the highest rate of students remaining in Indiana are the very ones that have seen the biggest declines. These are the schools that are most sensitive to state funding cuts—and have lost the lion’s share of young Hoosiers heading to college.
To put it bluntly, if you were to craft a public policy most likely to contribute to brain drain, you would cut funding to regional universities. This policy would hardly matter to flagship universities, which are able to bolster numbers by admitting a higher share of out-of-state students. For example, for every 10 new in-state students IU or Purdue has brought to campus, they’ve added 37 to 39 new out-of-state students.
That is not a criticism of IU or Purdue. It is great for both institutions and the cities that host them. It is a good way to replace lost state funding, and they are wise to do so. But it won’t make Indiana a better-educated state. Those out-of-state students will stay in Indiana at much lower rates than Hoosier kids attending any state school.
The next two decades will offer some painful evidence of this growing problem. The economic pain will be concentrated, particularly in college towns outside of Bloomington and West Lafayette. But policies that exacerbate, rather than try to slow the loss of educated Hoosiers, can only end in tears.
Michael J. Hicks, PhD, is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University. Hicks earned doctoral and master’s degrees in economics from the University of Tennessee and a bachelor’s degree in economics from Virginia Military Institute. He has authored two books and more than 60 scholarly works focusing on state and local public policy, including tax and expenditure policy and the impact of Wal-Mart on local economies. Send comments to [email protected].
