Indiana University (IU) is a well-loved state institution. Like residents of Indiana, students at IU are known as “Hoosiers,” reflecting their important role in defining the values and future of the state. IU has long stood as an institution providing affordable and quality education to students across Indiana, but over the years, particularly at its flagship campus in Bloomington, it has seen an increase in out-of-state enrollment. While some praise this as a boost to the economy, the truth is that lifting up members of local Indiana communities through higher education could be a better use of taxpayer dollars.
This trend of increasing out-of-state enrollment is not unique to IU.
“For the last twenty years, nearly every flagship university in the U.S. has been decreasing its share of in-state students and enrolling more students from out of state,” said Aaron Klein, senior fellow in Economic Studies at the Brookings Institute.
Some other states have capped out-of-state enrollment for public universities to address this.
[RELATED: There’s No Place Like Home]
The Economic Benefit of Indiana University
All IU campuses received $623.3 million in fiscal year 2018-2019, resulting in an economic impact of $9.9 billion.
Evidence of this is seen through increased jobs brought to Indiana. Students gain $35,000 in income for every $10,000 spent on their IU degrees. As their base incomes increase, IU graduates are able to spend more disposable income which circulates throughout Indiana’s economy, presuming they remain in the state.
This impact is unrivaled by any other university in the state, partially because IU enrolls such a high number of students.
Nonresident Enrollment at Indiana colleges
The IU Bloomington incoming freshman class of 2023 held 46% out-of-state or international students and 54% Indiana residents. Purdue West Lafayette, also publicly funded, surpasses IU with 53 percent out-of-state or international students and only 47% Indiana residents.
Comparatively, the University of Indianapolis is a private institution, and had an economic impact of $2.5 million. About 85 percent of students enrolled at the university are from Indiana.
This appears backwards when compared to IU Bloomington, since there is no difference in the cost of in-state or out-of-state enrollment at private institutions, and yet a significantly higher percent of students enrolled at IU Bloomington are from out-of-state than at the University of Indianapolis.
Indiana University-Purdue University Indianapolis (IUPUI) is a worthy example of a sustainable, community-oriented public university, as 87 percent of enrolled students are from in-state. That could change, however, with new development planned as Indiana-University Indianapolis (IUI) splits from Purdue in Indianapolis (PIN).
Cap Models
Klein’s study of public flagship universities showed that only two universities, one of which was UNC, did not see an increase in out-of-state enrollment over a period of sixteen years, emphasizing the need for such a cap to address the growing issue of state schools not primarily serving the residents of their state.
University of North Carolina at Chapel Hill (UNC), currently has their cap for out-of-state enrollment set at 35 percent.
University of California Berkeley recently decreased their cap, which resulted in a large increase in out-of-state enrollment.
The University of Texas at Austin recently decreased their cap as well, but maintained a high percentage (89%) of enrolled in-state students, although that was still a decrease from the 91% prior to the loosening of the cap. Other factors may play a role in maintaining that high percentage of in-state students, however.
These examples show that out-of-state enrollment caps are extremely effective at keeping universities attentive to their mission of providing education for their state. Without these caps, on average universities increased nonresident enrollment by 55%.
Why universities do not want to resolve the issue
Out-of-state enrollment is simply too profitable for many universities to budge on their own. The cost of out-of-state tuition is significantly higher for out-of-state students, which likely acts as a profit incentive for universities to maintain a higher number of these students.
The net price (tuition after scholarships and grants) for an in-state student nationally is just $10,662. In contrast, nonresident students average $23,630.
A study done by Ozan Jaquette, an associate professor in the UCLA Graduate School of Education & Information Studies, shows that when colleges suffer a spending cut by state governments, nonresident numbers are increased.
“State disinvestment in public higher education compels public universities to behave like private universities by focusing on attracting paying customers,” the study pointed out.
These nonresident students crowd out in-state students, which may force them to attend universities in other states, paying much higher prices as well and perpetuating the issue.
When exploring this theory, Klein gave an example that in just 16 universities, the tuition difference would have raised a profit of $57 billion (before financial aid).
Financial aid awarded to in-state-students for IU Bloomington averages $14,226 in contrast to the out-of-state average of $11,008.
[RELATED: To apply or not to apply: who got accepted to the IU-I Honors College?]
Although out-of-state students may bring diversity of perspective and contribute to the educational mission of the university, it is imperative that IU maintains their focus on serving Hoosiers rather than serving their bottom line.
Indiana University is without excuse
The university appears very financially healthy, and so the need to make up for lost state funding cannot be used as an excuse for increasing out-of-state enrollment. Indiana University’s operating revenue in 2022 actually increased $177,616 from June of 2019 and the net position increased by just over one million.
In past years, funding to Indiana’s public universities overall has also increased. Since 2021, higher education received a 9% increase in spending, equaling over $27 million. Indiana spends about $37 billion of taxpayer dollars biannually, and about 10% of that goes to public universities.
As taxpayer funding has grown, so has the number of out-of-state students. In 2017, IU enrolled 70% in-state freshmen students, a large contrast to the current 54% of resident freshmen.
Public institutions rightfully exist to serve their own communities. For that reason, it is time for the state to require increased transparency and accountability for funds appropriated to Indiana’s universities. Taxpayers deserve to know that their money is being used responsibly, and that future generations of Hoosiers will benefit.
Rachel Cooper is an undergraduate student studying American Sign Language at IUPUI and an opinion writer for The Collegiate Commons. Featured image courtesy of IU Bloomington.
This is a terrible idea! Caps are inherently anti-trade and anti-intellectual. When IU and other universities cap — the whole world suffers (even though it temporarily benefits the locals slightly). When climate change and other terrible outcomes are waiting/happening in the world, we should act now with the best and the brightest amongst us from across the world. We should expand our world class education to the most. Would you want Los Angeles to hire mostly California born actors? Or stop professors from applying to IU jobs because they were born elsewhere?