Indiana should cap out-of-state student enrollment to solve brain drain

Indianapolis Star

04-08-2025

Indiana has long been a hotspot for out-of-state students, around 85% of whom return home after graduation. Recent data also shows Indiana residents are going out of state for college more than ever.
A provision hidden in President Trump's Big Beautiful Bill helped address this problem by capping the amount of debt graduate students can take on to pay for college, making it nearly impossible for them to afford studying out of state.
Indiana needs to follow suit by capping out-of-state enrollment at public universities and tying university funding directly to in-state student enrollment.
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An enrollment cap may seem harsh, but North Carolina and California have already successfully enacted one. Indiana almost followed suit with Senate Enrolled Act 448, but its enrollment cap provision was removed due in part to backlash from Purdue University.
That backlash emphasized how state funding cuts to higher education have created a perverse incentive for colleges to market themselves to out-of-state students and subsidize lower tuition for in-state students. That's the wrong approach.
Giving a higher proportion of enrollment capacity to out-of-state students can be beneficial to their bottom line in the short-term. But, over a lifetime, bachelor's degree recipients add around $700,443 more than high school graduates to the economy through higher taxes and spending. They also file less than one-third of unemployment claims and are one-third as likely to be in poverty.
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Recognizing that, the state should direct public universities to cut unnecessary or ineffective initiatives and focus more on the academic needs of in-state students.
As an example of unnecessary spending, Indiana University-Indianapolis spent $1.6 million just on diversity, equity and inclusion administrative staff salaries and its Social Justice Scholars program during the 2023-2024 school year. Thankfully, IU recently closed the Office of Diversity, Equity and Inclusion.
IU-Bloomington still gives its student government a nearly $300,000 annual budget with little to no oversight. In turn, it has spent $48,000 on DEI programs, $35,000 on emergency contraception, $4,000 on mail-order lubricants and condoms and much more.
Now, though, Indiana University is starting to make "deliberate and targeted reductions" in expenses as a result of state budget cuts. That's an acknowledgment that Indiana's public universities have room to cut spending without making up for budget cuts by bringing in out-of-state students.
Despite these budget cuts, the Indiana General Assembly is still prone to wasting taxpayer dollars on schools' pet projects.
For example, they recently gave $89 million to IU Indianapolis to build another athletics center and an additional $89 million for restroom upgrades, painting projects and other infrastructure upgrades.
The state could more efficiently use taxpayer dollars to serve the public if it redirected this money to fund tuition for students with financial need. Just that $178 million could more than double the 21st Century Scholarship Program's budget for awards.
Gov. Mike Braun has long emphasized the importance of Indiana's public universities serving residents first.
He recently pushed for a tuition freeze for in-state undergraduate students in exchange for a modest tuition increase for graduate students and those from out-of-state. He has also pushed them to offer automatic admission to in-state students who obtain an Enrollment Honors Plus diploma seal.
However, not all state agencies have fully embraced Braun's resident-first approach. The Commission for Higher Education has long focused on keeping graduates in Indiana by connecting students — both residents and out-of-state — with local job opportunities during and after college.
"It is critical in retaining talent to connect both resident and non-resident students to local employers as a way to better align degrees with a student's intended career and help them to see Indiana as a place where they could stay, work, and build a future," a spokesperson for the Commission for Higher Education told me.
Trying to retain people who grew up across the country is a lost cause. Few young adults move far from where they grew up.
It is getting even harder to put down roots anywhere at all in an economy where homeownership and the ability to obtain affordable housing is becoming further out-of-reach for young people.
Studies have shown the homeownership rate among student borrowers declined by 24% from 2009 to 2019, so the problem is clearly getting worse — and student debt is playing a role. Gen Z, in fact, has racked up almost twice as much debt as the previous generation.
Banning or capping out-of-state enrollment at public universities altogether or tying university funding to in-state student enrollment, then, is the most realistic way to stop Indiana's brain drain and ensure our public universities are sufficiently motivated to serve Indiana first.