Limited state funding for public higher education adds to workforce constraints – New Hampshire Bulletin

New Hampshire ranks as one of the lowest state funders of public higher education in the U.S.

First published in NH Bulletin, December 4, 2023; also republished in The Keene SentinelManchester Ink Link, Valley News and Union Leader

The Granite State is experiencing a long-predicted workforce shortage, which is related to an aging New Hampshire population and has been exacerbated by fewer residents who are employed or looking for employment than during pre-pandemic years. Given the projected need for workers in jobs that require college degrees, access to, and the affordability of, public higher education for Granite Staters is vital.

New Hampshire ranks as one of the lowest state funders of public higher education in the U.S., appropriating only $3,699 per full-time equivalent (FTE) student compared to the national average of $10,237 in fiscal year 2022. In fiscal year 2023, the state budgeted $106 for every person in New Hampshire compared to the national average of $338. To have funded public higher education at the same rate as the national per capita average that year, New Hampshire would have needed to increase total higher education funding to more than $464 million, approximately $318 million higher than what was appropriated.

With limited state support to offset costs, public colleges and universities must rely on tuition and fees to support their budgets. New Hampshire’s public institutions relied heavily on student payments for revenue in fiscal year 2022, with 72 percent of revenue generated from tuition. The national average was 42 percent. Furthermore, in the 2023-2024 academic year, New Hampshire’s public four-year institutions had the highest in-state tuition and fees rates among bordering states. Combined tuition and fees ranged from $14,558 at Plymouth State University to $19,112 at the University of New Hampshire in Durham. High tuition costs can contribute to increased student loan debt for graduates. Among 2020 graduates from New Hampshire public institutions, 70 percent graduated with student loans, averaging $39,950 per student, which was the highest rate in the U.S. Nationally, student debt is unequally distributed across racial and ethnic groups, with graduates of color typically carrying higher debt burdens than white graduates.

Beyond factors related to cost, young adults in the Granite State may not consider New Hampshire’s public institutions to have unique value when compared to colleges in other states. About 58 percent of respondents to a Stay Work Play NH survey from ages 20 to 25 years reported colleges in New Hampshire were “about the same” as colleges in other places. If young adult residents perceive their in-state institutions to be comparable, but more expensive, than other colleges, they may be more likely to leave the state to pursue their higher education.

In 2020, the most recently available data suggests that 56 percent of New Hampshire high school graduates seeking four-year degrees left New Hampshire for their education. Among New England states, Maine had the lowest rate of high school graduates (38 percent) bound for out-of-state four-year institutions. In 2020, Maine appropriated $7,838 per FTE student enrolled at a four-year institution compared to New Hampshire’s $2,494. To match Maine’s funding levels, New Hampshire would have needed to appropriate a total of approximately $201 million toward four-year public higher education, or about $106 million more than what was appropriated.

If this additional investment had allowed New Hampshire to match Maine’s in-state retention rate of four-year college-bound students, NHFPI analysis suggests the state could have retained 1,329 more high school graduates in 2020 who may have subsequently been more likely to join the Granite State’s workforce. If this increase in aid and a related reduction in tuition costs had been in place for a decade and kept New Hampshire’s retention rate in line with Maine’s rate, New Hampshire would have potentially retained 14,692 workers from 2010 to 2020. While cost is certainly not the only factor considered during the college selection process, it is regularly listed by undergraduates as one of the most important aspects when considering a college.

Educating a state’s workforce can have both individual and statewide benefits. A 2008 analysis from the Federal Reserve Bank of Boston estimated that the net state government revenue collected per four-year degree in New Hampshire was $56,000 (or $76,600 in inflation-adjusted early 2023 dollars) over the course of an individual’s lifetime. Higher long-term resident earnings benefit state and local budgets and economies through tax revenues and reduced reliance on economic support programs, including food assistance, Medicaid, and unemployment compensation.

Educating Granite Staters and keeping young people in New Hampshire is vital for building a pipeline of workers to in-demand careers to ensure a robust, age-diverse labor force. By increasing state funding to public institutions of higher education, New Hampshire could proactively create pathways to in-demand careers in the state’s labor force that require college degrees using resources and systems that are already in place. Doing so may increase individual wealth by reducing reliance on student loans and create positive returns on investment for the Granite State.

Nicole Heller, Ph.D, is a senior policy analyst at the New Hampshire Fiscal Policy Institute, a nonprofit, independent policy research organization based in Concord and focused on the state budget, New Hampshire’s economy, and policies affecting Granite Staters, particularly those with low and moderate incomes. Learn more at nhfpi.org