The debt dilemma

There are three troubling benchmarks that define Michigan today: horrific roads, overflowing prisons and long-term disinvestment in higher education.

All three reflect Michigan´s overall decline and stifle aspirations to return to the top-ranks of states. It´s not accidental. Rather, the trinity reflects the cultural and political values of voters and those they elect. Think of it this way: We spend more on putting people in jail and keeping them there than we do on supporting colleges and their students.

As a result, Michigan college graduates leave school with an average debt of $29,583 — eighth highest in the nation, according to 2013 analysis by the Institute for College Access & Success. The highest debt state was New Hampshire at $32,795; Louisiana was the lowest, $23,358. The thing to remember about these averages is that while some students have less debt, other have more ... much more.

Many states have cut their support for higher education, but few hacked away at their colleges and universities as much as Michigan. Between 2009 and 2014 the state reduced spending by 18.4 percent, the fifth largest decline in the nation for support of higher education. As for priorities, during the same period, prison spending increased each year except 2010.

Business Leaders for Michigan has been a vocal advocate for investing in higher education and the jobs and income growth it creates. It summarized the disinvestment problem in a report released last February:

“The result of budget cuts over the past decade is that Michigan now ranks 42nd for state support for two- and four-year public institutions and has the fourth least affordable tuition levels in the nation. Michigan would need to increase total state appropriations for public two- and four-year institutions by 50 percent to match Top Ten state level support and by over 100 percent to match Top Ten affordability based on tuition levels.”

It frames the issue in a way that ought to make investment in education, well, a no brainer. “The jobs that pay the most— require more education,” the report noted. They are also the jobs that most likely ensure long-term employment.

But remember, this is the “new” Michigan. The legislative response was to increase higher education spending by 2 percent in the current budget, barely the rate of inflation. Hewing to its “spend as little as possible” philosophy, lawmakers ignore the consequences and forgo opportunity — unfortunate short-term thinking. Currently, Michigan ranks 31st among state in the percentage of population with an associates degree or higher. As if that weren´t bad enough, it is 36th in personal income. Unless something changes — investment, attitude, sacrifice — this is Michigan´s future.

Unlike the state´s Republican-dominated political class, families have recognized the need to invest in education, and for many the only option is debt. At Michigan State University, the average debt load is actually smaller than the state average. The latest numbers from the Institute for College Access & Success estimates the average debt of graduates at $25,821 with 46 percent of students leaving school with some outstanding loans.

Unfortunately there are many colleges in the state whose students are worse off than MSU grads. At Lawrence Technological University, the graduating debt load is $42,044, highest in the state. But graduates at other private colleges also are saddled with crushing debt: $41,763 at Adrian College, $39,010 at Andrews University and $37,191 at Albion College. At these schools more than two thirds of graduates leave with some loans to repay.

Among state schools, the largest debt load follows students at Ferris State University: $37,325, and 81 percent of students leave school in debt. At the University of Michigan, student debt is $27,163 and 47 percent of students have to repay loans.

For students, investing in higher education means better-paying jobs when they graduate. Using data from the American Community Survey. Business Leaders for Michigan´s report concluded that the “wage difference is even greater in Michigan, where people with college degrees earn over 100 percent more than people with just high school diplomas. This wage premium is higher than in most other states, signaling the importance of higher education in Michigan.”

Which is why students and their families take on the debt. Ultimately they win and Michigan loses. Students with loans can pay 10 percent or more of their pre-tax earnings on a 10-year repayment plan. It means they have less money — and perhaps inclination — to settle themselves into a state that says it wants them to stay, but would rather invest in incarceration than education. They move to states with opportunity, those where personal incomes are higher, where education is more important than prisons. And where the roads won´t destroy the cars that they will be able to buy after they pay down their college loans.