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Steep Cost of NJ’s Public Colleges Works Against Students, Hurts State

Making a college education out-of-reach financially encourages students to attend school elsewhere -- and they rarely return

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The high cost of college and the staggering burden of student loan debt have spurred a variety of funding initiatives and policy plans at the national and state levels, from lottery-funded merit scholarships to proposed major expansions of federal subsidies.

The high priority that middle-class voters put on higher education has been reflected in the presidential campaign, most notably in the promise by Sen. Bernie Sanders “to make public colleges and universities tuition-free” if he is elected, largely through higher state and federal spending. Hillary Clinton has proposed free tuition at community colleges and billions in education grants to states, while Sen. Marco Rubio and Gov. Chris Christie said they favored programs in which investors would pay students’ tuition in return for a portion of their future income.

The problem is felt acutely in New Jersey, where tuition and fees at four-year public colleges average $13,303 a year, the fourth-highest figure in the country, according to the State Higher Education Officers Association. The national average is $9,142. Two-year colleges are also more expensive here at an average of $4,600 a year, compared with $3,962 nationally.

But the skyrocketing costs affect more than students and their families. More than a third of New Jersey’s college-bound seniors opt to attend out-of-state schools -- and they rarely return. Thus they’re contributing to the economy of some other state, paying taxes, buying houses, and often starting families. And that helps explain why state officials and lawmakers are pushing to fund programs that encourage New Jersey’s high-school graduates to stay home.

Even as costs have risen, the state has increasingly relied on students and families to cover them rather than tax dollars. Tuition accounted for 59 percent of higher-education funding in New Jersey in 2014, compared to an average of 47 percent nationally.

The Christie administration says it has helped students in recent years by putting more money into Tuition Aid Grants, the state’s need-based aid program. The 2017 budget proposal the governor unveiled Tuesday would boost TAG funding another $18 million or 4.6 percent, to $403.6 million. Democratic legislators also want to expand NJ STARS, the state’s merit scholarship program for county college students and some students at four-year schools, but the governor has not budgeted any increase.

In addition, Christie cut direct state support for public colleges 7 percent last year and wants to keep higher-education funding basically flat in 2016-2017. The New Jersey Association of Colleges and Universities called his plan “a hopeful sign that funding is stabilizing, after cuts in the current fiscal year.” At the same time, the budget suggests that college affordability will remain a pressing issue for the foreseeable future.

Christie’s 2017 budget would keep operating support at $700 million for the senior institutions and at $134 million for the 19 county colleges. Total higher-education funding, including all forms of assistance to schools and students, would dip very slightly to $2.2 billion.

A student brain drain

One consequence of the high cost of college has been to push students out of state. New Jersey has been described as the nation’s top exporter of college students, with nearly 40 percent of those who attend four-year colleges choosing schools in other states in recent years.

Despite having received the benefits of the state’s excellent elementary and high schools, students end up moving away and contributing economically elsewhere, said Jacob Farbman, spokesman for the New Jersey Council of County Colleges.

“In a lot of cases, when students leave our state, and they go to Pennsylvania or New York or wherever they go, they stay there when they get out of school,” Farbman said. “They get jobs there when they get out of school, so they're paying income taxes to that state. They're paying property taxes to that state. They're buying goods and services and paying sales taxes to that state and not our state, when we spent so much to get them where they are.”

A new study of outmigration trends by the New Jersey Business & Industry Association finds that young people age 18 to 34, the so-called millennials, were the group that had the highest rate of net population loss from 2007 to 2014. The NJBIA blamed the high cost of tuition, housing, car insurance, and other expenses for the departures, and said the absence of those young workers was affecting the economy.

NJASCU, whose members include eight "senior" institutions, noted that its member schools also lack the capacity to accept more students, which may weaken the impact of assistance programs and contribute to the high departure rate.

“State-supported scholarships do make it more inviting to New Jersey students to attend New Jersey institutions, but the institutions have to have the space and operational resources to accommodate them,” spokeswoman Pamela Hersh said.

Meanwhile, students who do stay in New Jersey often end up taking on heavy loan burdens to pay for their education. At Rutgers-New Brunswick, 62 percent of graduates in 2014 carried debt, which averaged over $25,000 apiece, according to College Board data. At Rutgers-Camden 77 percent of graduates carried debt, averaging nearly $28,700.

A number of other states have attacked the issue by creating large merit-based scholarship programs that encourage residents to stay and attend public colleges. The best-known effort is in Georgia, which in 2010 spent $539 million in lottery revenues on its HOPE scholarships and similar programs. Lotteries also paid for programs in Florida, totaling $423 million in 2010; Tennessee, $297 million; and South Carolina, $239 million, among others.

Georgia’s 22-year-old program is credited with starting the trend of lottery-funded state scholarships. The HOPE program increased the number of students who stayed in-state for college and “drastically increased” the test scores and GPAs of students attending public schools in Georgia, according to published studies.

New Jersey also funnels lottery money to higher education, though little of it goes into scholarships. Of the $960 million in lottery revenues spent on state programs last year, $268 million went to senior public institutions like Rutgers, $223 million to Tuition Aid Grants, $16 million to grants for economically disadvantaged students, and $4 million to NJ STARS. Higher education accounts for 56 percent of lottery spending, with the rest going to K-12 education, human services and veterans affairs.

Encouraging high achievers to stay

State Democrats have made college affordability a key part of their larger economic development agenda. A new package of Senate bills aims to expand NJ STARS, create a new scholarship program for very-high achievers, and improve student awareness of cost-saving options. Farbman praised the plan, but Hersh was skeptical, saying it is more important to focus on TAG and institutional budgets.

“Our message on affordability is that state funding for operations at the senior public colleges and universities and the state’s commitment to need-based aid are the keys to keeping costs affordable at our institutions,” she said.

Hersh noted that the state’s College Affordability Commission has been taking testimony at events around the state over the past year and will issue a report in October. It has been hearing about systemic tweaks that could deliver education at lower cost, such as freshmen remedial classes to speed up graduation, dual enrollment for high-school students, and alternatives to expensive textbooks.

While NJ STARS is relatively small, Farbman said it is an important tool to encourage students to stay in New Jersey, particularly middle- and lower-middle-income students who don’t qualify for much need-based financial aid. It covers two years of tuition at a county college for the top-performing 15 percent of high school students. Recipients who graduate with a GPA of 3.25 or higher are then eligible for NJ STARS II, which provides an additional two years of partial tuition assistance if they transfer to a four-year college in New Jersey.

NJ STARS originally covered students in the top 20 percent of their high school class, but the program’s growing costs led to legislation in 2008 limiting it to the top 15 percent. As a result, participation dropped from over 5,000 students a year to about 2,500, Farbman said. In the current fiscal year 2,360 students are receiving scholarships at a cost of $6.9 million, according to the state Treasury.

(By comparison, the state is spending $386 million on 66,000 need-based Tuition Aid Grants this year.)

S-991, a bill sponsored by Senate President Stephen Sweeney (D-Gloucester) and Sen. Sandra Cunningham (D-Hudson), would replace NJ STARS with the similar New Jersey HonorScholars Program. It would restore eligibility to the top 20 percent of high-school students. Scholarships for those continuing on to four-year schools would increase from $1,250 to $2,000 per semester.

“Too many graduates are being saddled with excessive debt, which is holding many of them back from purchasing a home, starting a family and contributing to the state’s economy,” Cunningham said. “These bills are about being resourceful and innovative. They are about giving our students the best opportunity to be successful, and making sure our state is strong into the future.”

“To see Sen. Sweeney and Sen. Cunningham introduce this legislation restoring the eligibility to the top 20 percent is a wonderful thing for students and for families in the state. We are incredibly pleased,” Farbman said.

NJASCU declined to praise the bill, suggesting that it could turn out to be too expensive. Hersh noted that NJ STARS had been scaled back to the top 15 percent “because the program became a victim of its own success, with more applicants than the state could support.”

The two organizations also split over a companion measure, S-989, that would create a new Einstein Scholars Program. It would fully cover four years of tuition and fees at a public college in the state for 25 top high-school graduates. Farbman called it “a wonderful incentive” for keeping students in New Jersey, while Hersh said it was unclear how the state would cover the estimated $330,000 cost.

“Would this money be taken out of the state fiscal support of the public institutions? Even though the amount may seem relatively small, it would be very significant for the senior public institutions in light of the fact that they were just cut over $34 million in FY2016,” she said.

The third bill in the package, S-990, would require high-school students to meet with guidance counselors to discussion tuition assistance programs and ways to earn college credit while still in high school. The three bills cleared the Senate Higher Education Committee last week and moved to the Budget and Appropriations Committee for consideration.

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