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Indiana's Brain Dead Higher Education Policy

Indiana should be trying to encourage more residents to go to college. Instead, the wealthy give handouts to the wealthy.
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Engineering Fountain at Purdue University. (PHOTO: COURTESY OF PURDUE UNIVERSITY)

Engineering Fountain at Purdue University. (PHOTO: COURTESY OF PURDUE UNIVERSITY)

Indiana is in the Rust Belt. Surely it has a brain drain problem. Why would any college graduate stay? Robber baron money to the rescue:

Indiana's philanthropic foundations five years ago gave away nearly $450 million -- nearly half their money, and more than twice the national average -- to educational causes in an attempt to combat the state's brain drain, one study said.

That tidbit was published in 2010. Almost $450 million was spent on the jihad against outmigration. Surely, in 2013, Indiana is reaping the benefits. Epic fail:

Max Russell had always been a conscientious student, but when his father died during his junior year of high school, he had to take on a 25-hour-per-week job to help his family pay the bills. The gig inevitably ate into the time he spent on homework, and Russell’s G.P.A. plummeted from 3.5 to 2.5, which complicated his ability to get the aid he needed to attend a four-year college. So he ended up at Ivy Tech Community College in Indianapolis. Last year, after finally qualifying for student loans and cobbling together some grant money, he transferred to Purdue University, one of the state’s top public schools.

At Purdue, Russell reconnected with Christopher Bosma, a friend from high school. Bosma’s family was considerably wealthier, but his entire tuition was free — as will be medical-school costs. An outstanding high-school student, he received a prestigious merit scholarship that covered both. Russell told me that he believed the two friends are about “equivalent in intelligence” but acknowledged that Bosma studied much harder in high school. He was unusually driven, he said, but it probably didn’t hurt that Bosma had the luxury of not having to help support his family.

Over the years, many state-university systems — and even states themselves — have shifted more of their financial aid away from students who need it toward those whose résumés merit it. The share of state aid that’s not based on need has nearly tripled in the last two decades, to 29 percent per full-time student in 2010-11. The stated rationale, of course, is that merit scholarships motivate high-school achievement and keep talented students in state. The consequence, however, is that more aid is helping kids who need it less. Merit metrics like SAT scores tend to closely correlate with family income; about 1 in 5 students from households with income over $250,000 receives merit aid from his or her school. For families making less than $30,000, it’s 1 in 10.

Emphasis added. Indiana should be trying to encourage more residents to go to college. Instead, the wealthy give handouts to the wealthy. Ergo, the state is relatively poor:

Many Hoosiers earn personal incomes that are decades behind their working counterparts in the rest of the country, a new Ball State University study says.

Researchers looked at 2010 Indiana wages and, adjusted for inflation, assigned each county the year in which its standard of living was equal to that of the nation as a whole.

Statewide, the study found, the average per capita income is at the 1996 national level.

That's what $450 million bought. Purdue must be thrilled. Richie Rich doesn't go to Johns Hopkins, filling a seat in Indiana on the dime of philanthropies doing their best to help the state race to the bottom.

Indiana is a zero-sum thinking state. In order to prosper, its neighbors must suffer. The place of Indiana takes priority over the people of Indiana. A brief lesson (free of charge) from the World Bank:

The second unfortunate idea that has crept into our vocabulary and enjoys a unique brand name that even Coca Cola would envy is that of “brain drain” - which conjures images of loss of human capital from poor towards rich countries. The counter factual as many labor origin countries will readily testify to – is “brain down the drain!” When human capital cannot find a suitable use, it moves to another location where it does, providing an economist’s dream come true of good resource allocation.

In fact, the very prospect of radically increasing earning potential through migration can boost enrollment in certain fields of education which are internationally marketable, hence actually increasing the supply of brains. And yet, the predominant footprint this term “brain drain” has left on policy making is to give rise to paternalistic thinking that some countries “need” their emigrants more, so they should either be sent home or their recruitment should be discouraged in the first place.

Why does Indiana hate good resource allocation? If the state offered a sound return for talent, then I wouldn't be writing this post. Attracting college graduates is hard work and the parents of those young adults don't vote in state elections. Much easier to throw money down the brain drain and get reelected.