Keeping College Grads in the State

Politicians will try just about anything that might boost their state’s economy. There aren’t many measures that will actually do that, so they resort to policies that they can plausibly say will produce economic benefits.

One idea that has been cropping up a lot in recent years is that a state can give its economy a lift by trying to keep students who graduate from colleges within its borders from taking jobs elsewhere. Several states have gone down that path, most recently Maine and West Virginia.

In Maine, Governor John Baldacci recently signed legislation that makes residents who graduate from a college or university in the state eligible for ten years of state tax credits of about $2,100 annually as long as the individual works in Maine. In West Virginia, Governor Joe Manchin recently said that in order to get “more of a return” on his state’s investment in higher education, he would like to see residents who have graduated from a college in the state be exempted from the West Virginia income tax until they turn 26. He also suggested giving students who remain in the state tax credits for money devoted to repaying student loans.