Christopher Tarakji

Stanley Wang
Nicole Lin
Nicole Polemitis

Student Loan Forgiveness: Combating Michigan’s Brain Drain

Thesis:
To combat the brain drain, Michigan should offer student loan forgiveness to people who
obtained undergraduate or graduate degrees from a Michigan institute of higher-education and
worked in Michigan for at least ten years. Eligibility includes an annual income of less than
$100,000 over the 10 years.

Background:
From 2013 to 2017, the state of Michigan had an average annual loss of 6,412 college graduates.
This loss negatively affected the state’s economy as potential, highly educated workers are
moving to other states, resulting in a brain drain (McVicar 2019). The brain drain is a problem
that made major companies like Amazon refuse to open corporate offices in Michigan cities due
to “insufficient talent base” (Gallagher 2018). The issue of the brain drain affects the state of
Michigan as a whole as the emigration of highly educated workers has led large corporations to
leave the state, which in turn has crippled the job market in Michigan, meaning that the number
of high paying jobs continuously dwindles away. This problem isn’t unique to Michigan.
Previous attempt to address the issue includes Maryland’s Maryland SmartBuy program, which
gives student loan forgiveness to homeowners in Maryland. A major reason why graduates are
leaving is due to the desire for higher pay to repay their student loans. Incentives involving
student loan forgiveness have been very popular. The federal Public Service Loan Forgiveness
(PSLF) grants student loan forgiveness to college graduates who work in public service for ten
years with no default. However, Maryland SmartBuy would not work due to Michigan’s
complicated housing situation, and PSLF lacks broadness of the impact. Nonetheless, this issue
must be acted on immediately as the rise in the brain drain will greatly undermine the growth of
Michigan’s economy, and will in turn threaten Michigan with recession.

Talking Points:
- Michigan’s economy is suffering due in part to the common exodus of recent college
graduates out of the state
- Due to increasing college tuition and student debt, graduates are eager to move out of the
state to lucrative jobs
- Student loan forgiveness will provide an economic incentive for recent college graduates
to remain in the state of Michigan for work through reducing the burden of student loans

Policy Idea:
This state-level policy will forgive student debt for graduates of Michigan universities after ten
years post-graduation under certain conditions. The individual must be a graduate of a Michigan
higher-education institute with at least a bachelor’s degree and must hold employment in
Michigan for ten years following the graduation date. Furthermore, the individual is only eligible
if their gross income remains under $100,000 ten years post-graduation. The individual must
make monthly payments towards their loans until the ten-year mark but will be allowed a grace
period of three late payments.

Policy Analysis:

The recommended policy for the state of Michigan grants student loan forgiveness to Michigan
higher-education graduates who have worked in Michigan for at least ten years and makes less
than $100,000 annually. This policy will incentivize college graduates to stay in Michigan upon
graduation, thus relieving the issue of brain drain. Although limited research was conducted on
the marco-economical effect of student loan forgiveness at the state level, previous research on a
national level suggests a result in higher GDP boost; thus, it is reasonable to assume the state’s
economic benefit (​Fullwiler, Kelton, Ruetschlin, Steinbaum 2018).

Another policy to reduce brain drain suggests a placemaking agenda with legislation-focused on
Michigan appeal (Granger 2016). Although, this can positively influence Michigan’s brain drain,
its effects are minimal. Research shows that 41% of recent Michigan university graduates choose
to stay in Michigan due to cultural/social life, compared to 39% choosing to leave Michigan
("Mobility And Employment Of Michigan’S Millennial Talent" 2013)​. This 2% difference is
insufficient to support a placemaking agenda. Thus, the policy based around the PSLF will prove
to be more successful as 44% of graduates leave Michigan due to financial benefits, such as loan
forgiveness, with only 26% staying, a larger 18% difference (​"Mobility And Employment Of
Michigan’s Millennial Talent" 2013)​.

The annual income cap of $100,000 prevents the unnecessary use from those less likely in need
of student-loan forgiveness, while still reaching a wide population as 75.4% of Michigan
households earn less than $100,000 a year (US Census 2019). The cap allocates disposable
resources to graduates in need of student debt relief.

Next Steps​:

A loan-based repayment for Michigan graduates will cause a positive correlation with
Michigan graduates and migration post-graduation, which in turn resolves brain drain as human
capital increases. A primary influence includes Michigan Department of Education State
Superintendent, Michael Rice, where he attends governor meetings and advise the state
legislature on education policies (Michigan.gov 2019). Lobbying the policy to the chairwomen
of Michigan House Education Committee, Pamela Homberger (House.mi.gov 2019), and to
Michigan Senator Committee Chair, Mary Knollenberg (Senate.michigan.gov 2019), will
introduce the policy to legislatures to be put on the floor with their recommendations. Next, the
policy should gather momentum through constituent pressure to hold hearings on the bill and get
it moving; constituents should also express support for the bill. With close following of the rules
of the legislature’s education committees, the bill should receive three readings per state
legislation rule. Once passed, the policy will go back to the Department of Education for
implementation.

Key Facts

● $62,458 is the average loan debt that is currently forgiven by the PSLF program
● PSLF approved 610 applications and forgave 338 debter’s student debt, out of 132,000
processed applications.
● The average student loan debt in the Michigan is $31,000 which has risen from $21,600
in 2009
● Those with less than 10,000 of student loan debt are more likely to default, those with
more loans are more likely to repay.

Action Plan Snapshot

Since the University of Michigan has aimed to make higher education affordable through heavily
reduced and free tuition to in-state students, this policy should be advocated to the Michigan
state legislature and specifically to the Board of Education as opposed to advocacy targeting
universities. Through lobbying, the Board of Education and state legislatures must be presented
with the statistics of the rising cost of higher-level education and the number of graduates who
move out of the state for career opportunities following graduation. Directly lobbying to Michael
F. Rice, the superintendent of the Board of Education is an effective method as the policy
proposes a solution to Michigan’s student debt crisis while simultaneously solving the brain
drain by rewarding graduates who remain and work in the state of Michigan. Reaching out to
Student Debt Crisis, a non-profit dedicated to reshaping student debt and student debt policies,
would also be effective. As a national organization, they have the potential to act as an effective
media outlet to promote the policy.

The policy requires more in-depth modeling and research before it can be transformed into a
votable bill. It would be a big step forward to get State support for further research on the plan by
experts. Additional information such as the exact number of Michigan residents expected to
benefit as well as the total estimated cost would be extremely important for the further
advocation of this idea.
We will begin preparation for raising awareness of Michigan’s brain drain during December to
U-M students through fliers and digital advertisements. While continuing to raise support for the
policy on campus, in January, we will start reaching out to state legislatures to bring awareness
of our policy to the state government. After, in early 2020, we will journey the Michigan’s state
capitol for a lobby day. During our lobby day we will meet with influential figures of Michigan’s
education policies like committee chairs, where we will express the cruciality of brain drain at
Michigan and inform them of our policy solution. After lobby day, we will hold legislatures
accountable by following up with emails.

Endnotes

1. "2018: ACS 1-Year Estimates Data Profiles". 2019. United States Census Bureau.
https://data.census.gov/cedsci/table?q=michigan%20income%20distribution&g=0400000
US26&table=DP03&tid=ACSDP1Y2018.DP03&t=Income%20and%20Earnings&syear=
2020&vintage=2018&cid=DP03_0001E&lastDisplayedRow=80​ [Accessed 26 Nov.
2019]
2. "Mobility And Employment Of Michigan’S Millennial Talent". 2013. Umdilabs.Com.
http://umdilabs.com/sites/default/files/Presidents%20Council%20Summary%20Final.pdf
[Accessed 26 Nov. 2019]
3. "Student Debt Forgiveness Sounds Good. What Might Happen If The Government Did
It?". 2019. Npr.Org.
https://www.npr.org/2019/07/10/738506646/student-debt-forgiveness-sounds-good-what-
might-happen-if-the-government-did-it​ [Accessed 27 Nov. 2019]
4. Dynarski, Susan. 2019. "The Trouble With Student Loans? Low Earnings, Not High
Debt". Brookings.
https://www.brookings.edu/research/the-trouble-with-student-loans-low-earnings-not-hig
h-debt/​ [Accessed 27 Nov. 2019]
5. Elliott, William, and Melinda Lewis. 2015. "STUDENT DEBT EFFECTS ON
FINANCIAL WELL-BEING: RESEARCH AND POLICY IMPLICATIONS". Journal
Of Economic Surveys 29 (4): 614-636. doi:10.1111/joes.12124.[Accessed 26 Nov. 2019]
6. Friedman, Zack. 2019. "99% Of Borrowers Rejected Again For Student Loan
Forgiveness". Forbes.Com.
https://www.forbes.com/sites/zackfriedman/2019/05/01/99-of-borrowers-rejected-again-f
or-student-loan-forgiveness/#77816fdfb16b​ [Accessed 27 Nov. 2019]
7. Fullwiler, Scott, Stephanie Kelton, Catherine Ruetschlin, and Marshall Steinbaum. 2018.
"THE MACROECONOMIC EFFECTS OF STUDENT DEBT CANCELLATION".
Levy Economics Institute of Bard College.
http://www.levyinstitute.org/publications/the-macroeconomic-effects-of-student-debt-can
cellation​ [Accessed 27 Nov. 2019]
8. Gallagher, John. “Amazon to Detroit: You Didn't Have Enough Talent.” Detroit Free
Press. Detroit Free Press, January 18, 2018.
https://www.freep.com/story/money/business/john-gallagher/2018/01/18/detroit-amazon-
headquarters-finalists/1043624001/​ [Accessed 27 Nov. 2019]
9. Granger, B. (2016). Policy Analysis: Brain Drain in The State of Michigan. [online]
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http://closup.umich.edu/files/closup-swp-6-Granger-Policy-Analysis-Brain-Drain-in-Stat
e-of-Michigan.pdf [Accessed 26 Nov. 2019].
10. Hicks, Justin. “One Indiana Startup Is Putting A Stopper In The 'Brain Drain'.” WFYI
Public Media, July 2, 2019.
https://www.wfyi.org/news/articles/one-indiana-startup-is-putting-a-stopper-in-the-brain-
drain​. [Accessed 26 Nov. 2019]
11. House.mi.gov. (2019). Standing Committees. [online] Available at:
http://www.house.mi.gov/MHRPublic/standingcommittee.aspx [Accessed 26 Nov. 2019].
12. Mcvicar, Brian. “Michigan Still Fights 'Brain Drain,' Although Outlook Has Improved.”
mlive, March 28, 2019.
https://www.mlive.com/news/grand-rapids/2019/03/michigan-still-fights-brain-drain-alth
ough-outlook-has-improved.html​.
13. Michigan.gov. (2019). MDE - Contact MDE. [online] Available at:
https://www.michigan.gov/mde/0,4615,7-140-83834---,00.html​ [Accessed 26 Nov.
2019].
14. Purdue News Service. “Purdue Launches Brain Gain Initiative, Seeks Statewide
Partners.” Purdue University News. Accessed November 26, 2019.
https://www.purdue.edu/newsroom/releases/2018/Q4/purdue-launches-brain-gain-initiati
ve,-seeks-statewide-partners.html​. [Accessed 27 Nov. 2019]
15. Senate.michigan.gov. (2019). Education Subcommittee Committee. [online] Available at:
https://senate.michigan.gov/committee/educationsub.html​ [Accessed 26 Nov. 2019].