Worried about Brain Drain? Invest More in Private Colleges and Universities to Create Brain Gain

By Dr. Tanuja Singh, University of Indianapolis President

Indiana and Indiana businesses—from the smallest not-for-profits and startups to the Fortune 500s—need talented college graduates who have the skills needed for today’s world. Indiana is an attractive destination when it comes to recruiting students to its universities and colleges. But our advantage evaporates when it comes to retaining these graduates; we rank 40th in the country in terms of college graduate retention. Since the Indiana Commission for Higher Education started tracking this metric more than five years ago, this problem of brain drain among the best and brightest is not merely persistent, it is getting worse.

Somewhat surprisingly, this is not a new phenomenon. The landmark (and eye-opening) 1999 study conducted by the Indiana Fiscal Policy Institute found that Indiana retained its graduates at a rate almost 30 percent below the national average. Almost 25 years later, the National Bureau of Economic Research estimated Indiana was a net exporter of college graduates, the 11th worst state in the nation.

This trend is particularly troubling because business investment in Indiana is growing at a record pace, at least partly because of our business-friendly environment. According to the Indiana Economic Development Corporation, 2024 marked the eighth consecutive record-breaking year bringing in more than $39 billion of capital investments. The question is whether Indiana can support the talent needs required to buttress and grow these investments in industries that increasingly require college level skills.

To its credit, Indiana retains 67 percent of Hoosier graduates who earn a bachelor’s degree at an Indiana college or university. However, that number is only 15 percent of non-residents, according to Indiana’s latest State of Higher Education report. 

If you are looking for a silver lining in this news, private institutions like the University of Indianapolis are far more successful in retaining their graduates. More than 90 percent of our college graduates last year had a positive career outcome—either by finding a relevant job in their field or going onto graduate school. And more than 91 percent of our undergraduates who chose the employment route remained in Indiana.

But it’s not just UIndy. Private institutions across Indiana retained 71 percent of their bachelor graduates after one year, and almost 70 percent five years after graduation according to data from the Independent Colleges of Indiana (ICI). Compare that to Indiana’s public postsecondary institutions which retained 61 percent of baccalaureate graduates after one year from 2007 to 2018.

Of course, much has changed since 2018 and there are some clear signs of progress, but the challenge remains. We are a net importer of students but a net exporter of those successfully completing their education. Private institutions including UIndy also attracted 44 percent of their freshmen from outside Indiana—which means they are net importers of out-of-state students. That statistic alone should make us think about how we might change the flow from a brain drain to a brain gain!

So what can be done to support private colleges that are bringing talented students to our state? I urge our state lawmakers to recognize the importance of all 29 independent colleges of Indiana: Include them in the conversation around talent development and support them with financial assistance and legislative decisions. 

This is not an emotional argument. It is supported by the math. Consider this return on investment (ROI) data: for every dollar that the state provides to ICI institutions, the state of Indiana gets $70 worth of economic impact. In addition, ICI institutions contribute $1.6 billion in salaries, wages and benefits for their employees. Their graduates represent 29 percent of all Hoosier baccalaureate degrees and 36 percent of all STEM and nursing degrees—no small feat considering the well-earned respect Indiana’s public universities and colleges have in these fields. But while 31 percent of ICI students are eligible for a Pell grant based on financial need, just 21 percent of ICI students receive a state grant. Furthermore, the average cost to Indiana taxpayers for each public college bachelor’s degree is more than 10 times higher than an ICI bachelor’s degree ($56,524 vs. $5,436).

Would it not be a worthwhile investment to entrust additional appropriations with those who are bringing young minds to Indiana and keeping them here? Independent colleges and universities bring talent to Indiana, help them develop the skills needed by Hoosier employers and work intentionally to provide them experiential learning opportunities, many of them with our local employers, during their educational training. There is ample evidence that if students are exposed to experiential learning opportunities such as internships, work-based learning and project-based learning with employers while in college, they are much more likely to stay engaged with the same employers beyond graduation. 

We know that incentives like the Hoosier Business Investment Tax Credit or the Headquarters Relocation Tax Credit are attractive tools to encourage investment in Indiana. Why not use similar incentives to encourage people and students to grow roots here and become Hoosiers for life? For example, the state of Maine offers an Educational Opportunity Tax Credit for students and employers making educational loan payments at both in-state and out-of-state institutions. The Michigan Economic Development Corporation promotes its talent pipeline with The Michigander Scholars Program to meet the needs of the tech workforce with scholarships of up to $10,000 to students who commit to stay in-state for 12 months.

More investment is needed at the private institutions that are educating and training the future Hoosier workforce. Just like the long-lasting benefit brought by a tax incentive for a physical building, it only makes sense to support this with dollars and cents. It’s imperative for us to work together, public and private, to solve our ongoing brain drain problem to create a stronger Indiana for us all.