Maine uses out-of-state college lure to combat aging demographics

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University of Maine officials say its out-of-state tuition discount program is starting to pay dividends for both the university and a state that is facing a demographic challenge from an aging population.

UMaine began slashing tuition at its flagship Orono campus for students from certain Northeastern states in 2016, with the goal of turning around declining revenue and enrollment. The "Flagship Match" has since been expanded across the U.S., with UMaine seeing an uptick in out-of-state enrollment which university officials hope will translate into more young professionals calling Maine home after graduation.

“It’s a win for the state and a win for the university,” said UMaine provost Jeff Hecker. “It has been very successful in bringing out-of-state students to the University of Maine.”

The program guarantees that academically qualified students from selected states will pay the same tuition and fee rate as their home state’s flagship institution, with all other new students receiving a competitive scholarship to "significantly offset" the cost of non-resident tuition and fees.

UMaine officials said they don’t know of any other public flagship campus in the U.S. offering a similar out-of-state tuition match initiative. The program requires students to meet certain qualifications including a minimum grade-pint-average of 3.0 on a 4.0 scale, an SAT score of 1120 or an ACT score of 22.

Hecker noted that the program lifted UMaine’s first-year students from Massachusetts by 75% during the start of the rollout in the fall 2016 semester. The university has increased its total out-of-state enrollment percentage first year students to 46% from 35% since the match initiative debuted.

Maine's population is the oldest in the U.S., which has resulted in workforce shortages for certain industries. The U.S. Census Bureau estimated Maine's median age at 44 in 2016, compared to 37.7 for the entire U.S.

“The reality is that with the demographics there are fewer and fewer high school graduates,” Hecker said. “Without something dramatic changing there will be fewer and fewer 18 to 24 year olds and that is not good for the University of Maine or the state.”

UMaine reported last year that a survey of employed graduates said 19% who attended the university from outside of Maine remained in the state after completion of their studies. Among respondents from Maine, 72% of the full-time employed said they had stayed in the state following graduation.

Maine’s aging demographics became an issue in last year’s gubernatorial election, captured by Democrat Janet Mills, who said the state’s workforce shortages would be among her top priories. A survey of 1,000 Maine employers from a Making Maine Work report released last year found that the state’s workforce shortage was the second-biggest concern they wanted the next governor to address, behind only healthcare costs.

New Maine Commissioner of Education Pender Makin, appointed by Mills in December, said she sees strong potential in the UMaine Flagship Match program to draw more high-quality students who will stick around the state after graduation. The university has been promoting the program through billboard advertisements in states like Massachusetts, Connecticut and New Jersey.

“This is a terrific example of the innovative efforts of the University of Maine in drawing the attention, talents and tuition dollars of scholars from across the country,” Maikin said. “We have every confidence that programs such as this, coupled with the high quality of education and living offered by our great State of Maine, will draw in students, who will then stay as professionals and contributing citizens.”

An April 2018 Moody’s Investors Service report noted that Maine and other aging states like New Hampshire, Vermont and West Virginia face challenges of weaker economic conditions with lower revenue growth. Maine’s total tax revenue growth from 2011 to 2016 was 2.4% compared to the 50-state median average of 3.5%, according to Moody’s. Personal income tax growth was just 0.9% for that time period, well below the 4.7% national average.

“We see less dynamic economies in the older states, including Maine," said Moody’s analyst Pisei Chea. “It is important for states to try and implement initiatives to mitigate the challenges of an older population.”

Maine’s general obligation bonds are rated Aa2 by Moody’s and AA by S&P Global Ratings. The University of Maine System’s debt has ratings of AA-minus from S&P and Fitch Ratings.

The share of Maine’s population at 65 and older was 20% in 2017 and is estimated to comprise 26% of the state by 2027, according to Moody’s. Chea noted that a high concentration of residents ages 65 and up creates political barriers to raising taxes to create higher revenues because many retirees are on fixed incomes and may be resistant to seeing tax rates increase. She added that older residents tend to have less taxable income and are less likely to shop at retail stores resulting in lower sales taxes.

In addition to the Flagship Match, Maine also launched a program a few years ago offering tax credits to student loan borrowers as another way of attracting younger workers. The educational opportunity tax credits, which are designed to help cover the repayment of student loans for eligible Maine students who work and pay taxes in the state after they graduate from college, have grown 77% in the last two years, according to the Finance Authority of Maine.

Lisa Washburn, managing director at Municipal Marketing Analytics, noted that efforts by UMaine and state officials to try and combat aging demographics is vital in light of a Maine State Economist study released in December projecting that the state's working-age population will decline 6% by 2026. The report estimates Maine’s total population increasing just 0.8% from 2016 to 2026.

“The state needs to facilitate in-migration among those that will increase its economic output, so removing the cost-barrier for out-of-state students to attend school there is good and benefits the university as well,” said Washburn. “If the strategy is successful and enrollment is maintained or increases at the university, the state will need to make sure that it can retain students post-graduation by attracting more businesses to the state and making the case for graduates to stay in the state.”

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