Christy Daggett, Maine Center for Economic Policy

Originally published in the Bangor Daily News on June 23, 2105.

This budget season has been contentious, but one priority seems to have secured some agreement: increasing the State of Maine Grant, a need-based grant awarded to more than 26,000 Maine two- and four-year college students.

There are good reasons why increasing the State of Maine Grant has attracted support from both sides of the aisle. College has become less affordable for all Maine students, but because grants have not kept up with tuition increases, college remains least affordable for the poorest students. State need-based aid has been stagnant or declining in recent years. The “unmet need” for low-income students in Maine is sizeable and growing. As a result, the poorest students either resort to costly student loans or they do not apply to college at all.

This is a bad outcome both for individuals and the state’s economy. Higher college completion rates correlate with higher median wages at the state level. Maine does an above-average job at ensuring students from low-income families successfully graduate from high school. Unfortunately, low-income graduates are much less likely to take the next step and apply to college. There is a 24-point gap between the percent of middle-class high school graduates who apply to college in Maine and the percent of low-income students who apply.

Targeting need-based grant aid to the students who need it most is a strategy proven to boost college matriculation and completion. For example, the Kentucky legislature committed to boosting college graduation rates in 1997 and pursued several strategies, including a dramatic expansion of state grant programs.

In 2000, the low percentage of adult Kentuckians with postsecondary degrees placed Kentucky near the bottom of U.S. states in terms of degree completion. Over the next 10 years, Kentucky improved faster than any other state in the nation on several higher education metrics.

By 2006, Kentucky ranked third in the nation in providing state grants to undergraduates. Beyond its need-based College Access Program grant of $1,900 annually, Kentucky offers an annual premium of up to $375 tied to grade point average, and targets even more aid to students in counties with the lowest degree attainment — so a student qualifying for a “Coal County Scholarship” can receive an additional $6,800 per year.

Between 2000 and 2011, Kentucky’s improvement in both rates of degree holders and on-time completion was the best in the nation. Most notably, the percent of young adults with degrees improved more than any other state — moving Kentucky from 44th among U.S. states to 36th. Over the same period, the state had a net gain of new residents without college degrees — so the phenomenon of increased college graduation rates is clearly homegrown. College completion also improved over the same period; Kentucky’s on-time graduation rates from public four-year institutions improved the most in the nation, and graduation rates from community colleges moved from 38th in the U.S. to 16th. Overall, Kentucky increased the number of degrees and credentials awarded by 62 percent, and per-capita income increased 22 percent over the period.

The Kentucky story provides compelling evidence that what is often framed as a problem of insufficient aspirations actually results from insufficient financial resources. If students think they can afford college, they will more likely apply, and if they have sufficient resources to attend, that boosts the odds they will complete their degrees.

The increasing debt load of graduates is another symptom of how Maine has fallen behind the rest of the nation in terms of relative higher education grants spending.

Attending the flagship four-year campus in Kentucky costs $23,100 per year. The flagship four-year campus in Maine costs $23,102. But debt bedevils Maine graduates far more: Maine’s average student debt load of $29,934 is the seventh-heaviest in the nation. In contrast, Kentucky ranks 34th in the nation in average student debt load.

In 1993-94, Maine ranked 24 th for state grant funds awarded per student, and Kentucky ranked 21st. Since then, Kentucky has moved up to the top 10 in the U.S., while Maine’s grant monies per student have fallen to 31st in the nation. Ultimately, the issue isn’t a competition among states, but what is best for Maine students and the state economy. Increasing state grant aid could be transformational for thousands of Maine students, opening doors to opportunity to them and putting Maine on the path to a stronger, more vibrant economy.

Christy Daggett is a policy analyst at the Maine Center for Economic Policy. She is a member of the Maine chapter of the Scholars Strategy Network, which brings together scholars from across the country to address public challenges and their policy implications. Members’ columns appear in the BDN every other week.