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New Data: Tennessee In-State Tuition Bill Would Raise Spending Power Statewide by $19 Million, Add $5.5 Million to State and Federal Tax Revenue

NASHVILLE, TN – As Senate Bill 2263 is considered by the Tennessee Senate Education Committee tomorrow, New American Economy (NAE) has released new research highlighting the economic benefits Tennessee would see if the state allows undocumented high school graduates to qualify for in-state tuition. The bill would remove a significant barrier to higher education for thousands of students, channeling more educated workers into the state’s workforce.

In 2014, Tennessee Governor Bill Haslam launched the “Drive to 55,” an ambitious initiative designed to promote economic development and reduce unemployment by equipping 55 percent of state residents with a college degree or certificate by 2025. Yet, Tennessee’s current policies are leaving thousands of potential college graduates out of the equation—specifically, undocumented students who have grown up in Tennessee and graduated from the state’s high schools. These students are currently ineligible to pay the in-state tuition rate at Tennessee’s public college and universities, putting a college degree out the reach for many of them.

Out-of-state tuition can be as much as three times as much as in-state tuition, creating an insurmountable financial barrier for many undocumented students. Recognizing this, nearly 20 other states, including Kentucky, Virginia, Florida, Oklahoma, Kansas and Nebraska, allow these individuals to pay in-state tuition.

“Businesses in Nashville and around the state need access to an educated workforce, and removing barriers to higher education will give more Tennesseans the opportunity to meet the needs of our employers,” said Ralph Schulz, President and CEO of the Nashville Area Chamber of Commerce. “This research shows that when we give more Tennessee students the chance to succeed, it benefits our entire state.”

“Giving more Tennessee high school grads the chance to pay their way through college isn’t just the right thing to do, it’s smart policy,” said John Feinblatt, President of New American Economy. “It would pay dividends for working families, and as it steers more educated workers into the Tennessee workforce, it would boost businesses across the state, too.”

“The research released today confirms what we have known all along: That leveling the playing field for Tennessee’s undocumented students will bring economic dividends to our state for years to come,” said Lisa Sherman-Nikolaus, Policy Director at the Tennessee Immigrant and Refugee Rights Coalition. “We urge the Tennessee State Legislature to do the right thing for these students and our state’s economy.”

In a new report that uses data from the American Community Survey and The Chronicle of Higher Education, NAE examines the economic impact of Tennessee passing Tuition Opportunity legislation and finds that it is overwhelmingly positive.

Removing Barriers to Higher Education: The Economic Benefit of Tuition Opportunity in Tennessee, finds:

  • Nearly 4,500 additional Tennessee students would enroll in college under an in-state tuition policy. Based on the college enrollment rates of students from similar demographic and socioeconomic backgrounds, an estimated additional 4,478 undocumented high school graduates in the state would be able to enroll in college under a policy allowing undocumented students to pay in-state tuition rates.
  • Obtaining a college degree by paying in-state tuition would boost the earnings of Tennessee’s undocumented students by up to $25 million annually. If an in-state tuition policy covering undocumented students became law in Tennessee, at least 2,145 of the new students who enroll would go on to graduate college within six years. Collectively, that group would earn almost $25 million in additional income annually following graduation.
  • Additional wages that undocumented students who graduate college earn would elevate their spending power by more than $19 million annually. Those students who graduate within six years would hold a collective spending power of $19.4 million that could go back into the state and local economy through consumer spending.
  • An in-state tuition policy would increase state and federal tax revenues by $5.5 million each year. Although Tennessee does not have an income tax, the higher wages of new graduates would allow them to spend more as consumers, benefitting the state through sales, excise, and property tax revenues, among others. The 2,145 students who would benefit from the policy and graduate within six years would be paying as much as $5.5 million combined in additional annual federal and state taxes.

Read the full report here.

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