A(n Incremental) Case for the Economic Benefits of Reducing Student Debt

In a guest editorial for the Concord Monitor, demographer Peter Franchese argues persuasively that the future of New Hampshire’s economy requires a much larger state investment in public higher education, in particular in its community colleges.

After framing the issues with reference to his own family history, Franchese focuses on the following “paradoxes” and “projections”:

“Perhaps the central paradox of our time is why this generation of young people has been asked to do something no previous generation was ever required to do: heavily mortgage their future with student debt in order to obtain the job skills required to compete in an economy so fundamentally changed from that of their parents.

“This paradox is particularly troublesome for a small state such as New Hampshire that needs to maintain economic growth and a competitive advantage in the global marketplace. Without the oil assets of North Dakota or high population growth of North Carolina, we can keep our advantage only by constantly increasing the skills and productivity of our workers.

“New Hampshire has just 740,000 people in its workforce, which is barely one-half of one percent of the 156 million people in the U.S. workforce. Besides its tiny size, our state’s labor force is not growing. Its numbers have not materially changed over the past seven years, and recent state population projections forecast no workforce growth for at least the next 10 years.

“However, the part of our state that is growing fast–-over 4 percent per year–-is the state’s elderly. Statewide projections foretell a 50 percent increase in our residents ages 65 or older over the next 10 years, a period when our prime working age residents (25 to 64) are projected to actually shrink by 4 percent.”

Franchese then very succinctly sums up the issue and proposes a solution:

“At first glance, a stagnant or declining workforce combined with a very fast-growing elderly population looks like a clear formula for economic decline as fewer working age residents will struggle to pay the sharply rising costs of elderly care.

“But our future does not have to turn out that way. If we can increase the skills and earning power of our state’s young adults then we can achieve economic growth through rising personal income and household wealth in place of the population growth we are unlikely to see again.”

Noting that a much higher percentage of new graduates with associates degree than with baccalaureate degrees remain in the state and that the cost of attending a community college is much lower than that for attending a university, Franchese then makes the case that subsidizing the cost of attaining an associates degree and reducing the debt that those students carry into their working lives will compound the economic impact of their earnings within their communities and very quickly offset the cost of educating them.

This is a very sound analysis and argument. But, over the last several decades, New Hampshire’s support for public higher education has slipped toward the bottom of the national rankings. So, Franchese seemingly faces long odds in provoking a serious discussion of his ideas. On the other hand, if things can change in any substantive way in New Hampshire, it may be at least a small signal of some broader movement toward a renewed respect for the value of public higher education.

And the two charts that I included with a previous post–on state support from 2008-2014 and on state support in 2013-2014—suggest that there is some small reason for such hope: https://academeblog.org/2015/05/18/new-report-highlights-the-decline-in-state-support-for-public-higher-education/.

Franchese’s complete op-ed is available at: http://www.concordmonitor.com/news/politicalmonitor/17379439-95/my-turn-in-long-run-state-will-pay-for-high-student-debt

 

 

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