Student debt’s economic consequences

If NH’s young people keep leaving, we face a grim future

When I was a teenager, my father, who quit school when he was 12, told me and my siblings that he was using all his savings to pay for our education. He felt that education was a unique asset because no one could swindle it from us and we could use our education to make our own wealth.

It’s amazing to me how his appraisal of education’s value is so on target for today. My late father could not have imagined the impact on young workers’ prospects in today’s global and knowledge-based economy.

But I’m sure it would mystify him that, with so many new jobs requiring more advanced skills, the cost of obtaining those skills, without going deeply in debt, is prohibitive.

The central paradox of our time is why this generation has been asked to do what no previous generation was ever required to do: mortgage their future with heavy debt to obtain the job skills required by an economy that’s so fundamentally changed from that of their parents.

This paradox is particularly troublesome for a small state like New Hampshire that needs to maintain a competitive advantage in the global marketplace. We can only keep our advantage by constantly increasing the skills and productivity of our workers.

New Hampshire has a workforce of just 740,000 people, 0.5 percent of the nation’s. Our labor force has not grown in seven years, and the state projects no workforce growth over the next 10 years.

But part of our state is fast-growing, at over 4 percent per year: the elderly. Projections forecast a 50 percent jump in residents age 65 or older over the next 10 years, when residents ages 25 to 64 are projected to shrink by 4 percent.

At first, this looks like a perfect formula for economic decline. But our future does not have to turn out that way.

If we can increase the skills and earning power of our young adults then we can achieve economic growth through rising personal income, in place of the workforce growth we are unlikely to see again. That assumes, however, that more of our young workers can obtain some education beyond high school and then stay in-state.

Young workers who obtain an associate degree can increase their annual earnings by over $10,000, which the Census Bureau calculates will result in at least $500,000 more in lifetime earnings. That would benefit not only each worker with such a degree, but would also boost the state’s economy.

The benefit to the state of more workers with a two-year associate degree is enhanced because it costs less and requires less time away from work. Also, post-graduate surveys have shown that three-quarters of New Hampshire community college graduates find full-time work here and stay in the state. Unfortunately, less than half of our four-year college graduates remain in-state.

Perhaps one reason so many four-year college graduates leave the state is that the average debt for three-quarters of our graduates was $32,800, highest in the nation according to The Institute for College Access and Success. We should all be troubled by that because
those graduates will face big mortgage payments, but with no house to show for it and fewer prospects for
buying one.

As a state that spends the least of any state per person on higher education, perhaps we ought to spend more time thinking about the consequences of spending so little. I am certain that if we gave more scholarships for two- or four-year degrees, and fewer loans, more of our graduates could look for work in-state.

One path that young people can choose is to enroll in one of seven New Hampshire community colleges. After two years, a transfer to one of the four-year state colleges is assured, but getting an associate degree in a STEM field is also a guarantee of well-paying work.

My late father gave up a lot of his limited income so his five children could have the benefit of a college degree, with no debt. We as a state, which ranks seventh in household income, must commit ourselves to doing the same for our young people.

Our economic future depends on it, because if our indebted young people keep leaving, our shrinking workforce and fast-growing elderly means a grim future for us indeed.

Peter Francese is a demographer who lives in Exeter.