A surge in out-of-state enrollment at flagship universities could exacerbate the student debt crisis

A recent report by the Brookings Institution found that nearly every state’s flagship university increased its share of out-of-state students between 2002 and 2018, which has contributed to rising student loan debt across the country. The “Great Student Exchange,” as the study calls it, may have increased total tuition for just 16 flagship students by roughly $57 billion over a 16-year period.

“Public flagships are predicated on a high-quality university that is accessible to the best and brightest in their state and supported to some extent by state taxpayers,” said study author and senior researcher Aaron D. Klein. economic studies at the research organization Brookings.

But Klein said student exchanges create a vicious cycle in which flagship schools increase their share of out-of-state students and increase tuition revenue in the short term, but lose state support in the process. And as state aid declines along with the share of in-state students, these universities become more dependent on those out-of-state dollars.

“And the cycle continues,” Klein said. “I don’t know where the chicken and the egg started, but it has to stop.”

A 2019 report by the Joyce Foundation, a policy research group focused on equity, hinted at this cycle. The Journal argued that public universities that seek wealthier out-of-state students may be under-recruiting high- and low-income students, though the institutions cited in the report disputed that claim.

Only two of the flagship states did not see an increase in their share of out-of-state students during the period covered by the Brookings report, but 30 of the 50 saw increases of at least 25 percent. The University of Delaware, one of only two flagships whose in-state enrollment remained stable, already had a majority out-of-state enrollment in 2002.

Another, the University of North Carolina at Chapel Hill, has policies in place that Klein says represent a possible solution to the transfer dilemma and could help reduce skyrocketing student debt.

In 1986, the University of North Carolina System’s Board of Governors adopted a rule that no more than 18 percent of the institution’s freshmen could come from out of state. The Chapel Hill campus was fined $1 million for one violation of this rule. Klein said his research showed that the cap did not limit the university, which has maintained a high national ranking. US News and World Reportand a competitive acceptance rate.

“This method has worked and kept the cost of college down for Carolinians,” Klein said. “And certainly the University of North Carolina at Chapel Hill has flourished even under this rule.”

Klein also cited the University of Texas at Austin as an institution that has maintained high enrollment rates in the state. The percentage of in-state students had declined minimally — from 91 percent in 2002 to 89 percent in 2018 — thanks to a state law requiring public universities to automatically admit the top student in each Texas high school’s graduating class. Klein said the law has also improved equity and diversity at Texas public colleges and created a pipeline for prospective students from primarily minority communities to attend Texas’ flagship institution.

Klein said student exchange has had a disproportionate impact on students of color, who are more likely to take on more debt to attend college.

“Other studies have shown that some flagship universities went out of their way to increase their marketing and reach out to affluent, out-of-state students in affluent communities,” Klein said.

While colleges are catching up with out-of-state students who can afford higher tuition, Klein said, low-income in-state students are being left behind.

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