Michigan college tuition hikes leave average graduate with $35K in debt

More Michiganders than ever have a college degree, but the state ranks 30th in the United States for the rate of residents with an associate’s degree or higher: 45 percent of working-age adults. 

Fewer than 30 percent of adults have at least a bachelor’s degree compared with 32.6 percent nationwide.

What’s at stake

The higher the education, the better the wages. The better the wages, the better the state economy.

Those with college degrees will earn on average about $1 million more  over the course of a lifetime than high school graduates, while they are  70 percent less likely to be unemployed than high school graduates.

In Minnesota, nearly 35 percent of adults hold a bachelor’s degree or higher. Its median household income was $8,000 higher than the national average of $60,336 in 2017. Michigan’s stood at about $5,000 lower than the national average. If Michigan had the same college graduation rate as Minnesota, the state would have 493,000 more adults with a degree than it does now.

Rising college costs

College is increasingly unaffordable for Michigan residents. 

In just five years, the average student loan debt of Michigan college graduates soared 29 percent to average of $35,307. That’s the third biggest increase among states nationwide.

In the early 1990s, Michigan was among the top 10 states in spending for needs-based financial aid. But it has fallen by more than half since then – and Michigan is now among the bottom half of states for needs-based grant spending. The Michigan League for Public Policy found that Michigan spends $223 per undergraduate student on need-based grants per year, lowest among Midwest states and less than half the national average of $533.

At the same time, the cost of tuition and housing rose faster than inflation at 14 of Michigan’s 15 public universities over the past decade, ranging from an 8 percent to a 41 percent jump between 2010 and 2019.  Average public university tuition in Michigan –  estimated at $12,930 according to a 2019 report –  ranked sixth highest in the nation. In 2015, tuition constituted 69 percent of college revenues in Michigan, the sixth-highest in the nation. In other states with higher state aid, tuition is lower. Tuition comprised 32 percent of university revenues in Illinois and 57 percent in Indiana.

Higher education cuts

In large part, schools turned to escalating tuition to compensate for declining state funds for higher education. That’s because of declines in state aid, which constituted 20 percent of universities’ revenue in 2018, down from 26 percent in 2010.

In comparison, Michigan’s community colleges had an average of $5,223 annual tuition in 2018-19. That’s the lowest tuition in the Midwest and 31st lowest in the nation. Community college students nationwide are more likely to graduate without student loans – more than 60 percent nationwide graduate without taking out loans.

Reforms

Gov. Gretchen Whitmer is proposing two programs: The MI Opportunity Scholarship, which would provide two years of free tuition for high school graduates at community colleges or four-year universities. The MI Reconnect program would provide the same benefit or technical training to students older than  25.

The two programs would cost about $270 million per year, but Republicans did not act last year on bills in the Legislature to launch them. Business groups support the measure, citing the state’s need for more skilled workers.