The InterState Brain Drain:

1
The Inter-State Brain Drain

• The Implications of Differential Tuitions at
  Public Institutions
• Student Financial Aid Research Network, June 11,
  2005

Hoke Wilson Pedro Saavedra Daniel Geller
Fred Galloway
2
The Inter-State Brain Drain The Implications of
Differential Tuitions at Public Institutions

• The rise in tuitions at public institutions over
  the past 20 years has been well documented
• Average Tuition and Fees in AY03-04 4,696
• Average Tuition and Fees in AY93-94 3,188
• Growth rate Up 47
• (Source College Board, 2003 Cited in Investing
  in Americas Future, Institute for Higher
  Education Policy and Scholarship in America, May
  2004, p.13)

3
Question What Happens When Prices/COA
Change?(From Swail, Watson Scott and Donald E.
Heller, Changes in Tuition Policy, Educational
Policy Institute, August 2004, p.41)
4
Answer Enrollment moves in the opposite
direction of Price/COA

• Arguments Rising prices at public 4-year
  institutions
• Redirect marginal income groups from 4-year to
  2-year institutions
• Makes attendance at out-of-state institutions
  more attractive.

5
Why should we care if students take their
business elsewhere?

• Substantial loss of a States K-12 investment
• Total Current K-12 Expenditures (2001-2002)
• California 46,265,544,169 (mu7,279)
• Maryland 7,480,723,189 (mu8,630)
• Illinois 16,480,787,418 (mu7,908)
• US Average 7,225,473,311 (mu7,645)
• (Source NCES CCD 2001-2002 compiled as State
  Education Data Profiles)

6
Why should we care if students take their
business elsewhere?

• In addition to the private benefits accruing from
  higher education, the following public benefits
  have also been documented.
• Public Economic
• Increased tax revenues
• Greater productivity
• Increased consumption
• Increased workforce flexibility
• Decreased reliance on government financial
  support.
• SourceThe Investment Payoff A 50 State Analysis
  of the Public and Private Benefits of Higher
  Education. Institute for Higher Education Policy,
  February 2005

7
Why should we care if students take their
business elsewhere?

• In addition to the private benefits accruing from
  higher education, the following public benefits
  have also been documented.
• Public Social
• Reduced crime rates
• Increased charitable giving/community service
• Increased quality of civic life
• Social cohesion/appreciation of diversity
• Improved ability to adapt to and use technology
• SourceThe Investment Payoff A 50 State Analysis
  of the Public and Private Benefits of Higher
  Education. Institute for Higher Education Policy,
  February 2005

8
Who Goes Where? High Exodus
9
Who Goes Where? Low Exodus
10
Who Goes Where? High Exodus (Public Only)
11
Who Goes Where? Low Exodus (Public Only)
12
National Averages (Public and Private)
13
National Averages (Public Only)
14
Income vs Destination (Public and Private)
15
Income vs Destination (Public and Private)
16
Income vs Destination (Public Only)
17
Income vs Destination (Public Only)
18
Institutional Control vs Destination (Public and
Private)
19
Dependency Status vs Destination
20
Estimating the Impact of Tuition Hikes on Student
Exodus

• What we know so far
• As income rises so does student choice
• Independents are Stay-at-homes (largely )
• Students who leave home, especially middle income
  students, are not likely to wander far
• What we dont know
• The impact of tuitions on student choice

21
Assessing the Impact of Tuitions on Student Choice

• Logistic regression limited to first-time
  freshmen attending a 4-year, public institution
• Estimating the probability of going out-of-state
  dependent on
• Dependency Status
• Total income used to calculate expected family
  contribution

22
Assessing the Impact of Tuitions on Student Choice

• Estimating the probability of going out-of-state
  dependent on (continued)
• In-state tuition, weighted by the number of
  attending freshmen, for AY03-04, AY02-03, and
  AY01-02
• Out-of-State tuition, weighted by the number of
  attending freshmen, in States contiguous with, or
  within 250 miles of the students home state.
  Calculated for AY03-04, AY02-03, and AY01-02
• For corresponding academic years, the ratios of
  in-state to out-of-state tuition
• One- and two-year growth rates for the above
  variables

23
Assessment Results

• In all models, dependency status and income are
  always significant predictors. The probability of
  going out of state increases with income and
  decreases if the student is independent
• Out-of-state tuition variables are very poor
  predictors as are growth variables

24
Assessment Results

• In-state tuition is a good predictor with the
  best being the one year lag (AY02-03) of weighted
  in-State tuition. As in-state tuition rises, so
  does the probability that a student will leave
  his or her home state.
• The best predictor is the one year lag of the
  ratio of in-state to out-of-state tuition. As
  this variable gets larger, so does the
  probability that the student will leave home.

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The Model
26
The Model
Income Mean 33,971 Tuition Ratio Mean
37.91
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The Model
28
Summary

• When in-state tuitions rise relative to
  out-of-state tuition in surrounding States,
  students may vote with their feet
• Prospective students do not respond directly to
  levels of out-of-state tuitions
• This implies that the strongest signal they
  respond to emanates from their State legislatures
• States can decide if they would like to eschew
  long-term returns on their investments in favor
  of short-term cost savings.

29
Comments? Questions?

• Hoke Wilson Hoke.J.Wilson_at_orcmacro.com
• Fred Galloway Galloway_at_sandiego.edu

30
The Inter-State Brain Drain

• The Implications of Differential Tuitions at
  Public Institutions
• Student Financial Aid Research Network, June 11,
  2005

Hoke Wilson Pedro Saavedra Daniel Geller
Fred Galloway