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Frerichs: Require Opportunity Scholars to Stay in SD After Graduation

The South Dakota Opportunity Scholarship offers $6,500 (raised from $5,000 by 2015 HB 1147) over four years to reasonably intelligent South Dakota students who pursue post-secondary education in our fair state. Recipients’ obligations extend no further than keeping their grades up and staying on pace to graduate.

Now Senator Jason Frerichs (D-1/Wilmot) wants to add a Northern Exposure requirement (a reference that may sail over the heads of all current and future Opportunity Scholars) to the Opportunity Scholarship. While there’s no bill in the hopper yet, Senator Frerichs says he plans to introduce legislation to require Opportunity Scholars to remain in South Dakota after graduation:

If we as a state are going to invest in our young people that are going to college here by giving them this Opportunity Scholarship… we should expect that those young people will stay in state when they graduate….

We want to make that investment and see the return on investment, because if we don’t have the opportunities for them here in South Dakota, then we need to get to work in terms of industry and government and work together to have those opportunities for our young people [Sen. Jason Frerichs, audio, in  “SD Opportunity Scholarship to Be Debated During Session,” KCCR Radio, 2017.01.02].

I’m not sure how that last sentence fits in the rationale for adding a stay-in-South-Dakota condition to the Opportunity Scholarship. Telling smart kids, “Stay here or pay your scholarship back!” doesn’t really drive the economic diversification necessary to create job opportunities that don’t exist now for talented graduates.

Frerichs’s proposal may require us to revisit the purpose of the Opportunity Scholarship, which statute says is “to allow South Dakota’s most academically accomplished high school graduates to receive an affordable education at any university, college, or technical school” accredited in South Dakota. Toward that end, last school year, we spent $3.7 million on about 3,800 students. $1,300 by itself in one year doesn’t make Augustana or SDSU affordable, but every bit helps.

Along with satisfying the moral imperative of helping young people afford post-secondary education, what return are we getting on our Opportunity Scholarship investment? According to the Regents’ 2012 Annual Report on the Opportunity Scholarship, 22% of surveyed recipients said they would have gone to school out of state if they hadn’t received an Opportunity Scholarship. Out of last year’s crop of Opportunity Scholars, that’s about 830 students who tuition, fees, and room and board we capture here in South Dakota instead of losing to some other state. Given that the average cost of attending our universities ranges from over $15K at our publics to $38K at Augie, I figure those Opportunity Scholars are pouring over $15 million just into their campuses. Assume each of those 830 kids spends $400 a month on gas, clothes, pop, movies, concerts, and other non-campus expenses, and over nine months, that’s another $3 million pumped into the local economy.

For about $800,000 of scholarships spent each year to keep those 830 kids in state for university, we get $18 million in economic juice each year that would have gone elsewhere. That’s return on investment better than 22 to 1.

The Regents will also point to educational returns on investment. They see the Opportunity Scholarship encouraging high school students to take tougher classes, decreasing need for university remedial classes, and improving university student retention.

So by graduation time, we’ve already squeezed some good economic and educational outcomes from the Opportunity Scholarship program. Just how much more will we get with a stay-in-state requirement? According to a 2012 survey of four cohorts of mid-Aughts Opportunity Scholars, 68% of graduates intended to stay in state for work or graduate study.

Opportunity Scholarship: Where Do Graduates Go? (South Dakota Board of Regents, 2012 report, p. 28)
Opportunity Scholarship: Where Do Graduates Go? (South Dakota Board of Regents, 2012 report, p. 28)

The Regents have contended in past reports that Opportunity Scholars already stay in South Dakota at a higher rate than the general student population. The Opportunity Scholarship may incentivize students to stay in South Dakota after graduation without any stay-in-state requirement. That doesn’t mean such a requirement wouldn’t incentivize even more students to stick around… but it could also deter a number of those students from bothering with the scholarship and sticking around for university in South Dakota.

I understand where Senator Frerichs is coming from. If we give students a scholarship, why can’t we expect them to give something back to South Dakota? The same transactional principle underlies the Build South Dakota Scholarship: we pay for students’ vo-tech education, and in return, recipients work in South Dakota for three years in high-need technical areas.

But if we’re going to be transactional, we need to calculate the fair value of money and time. Build South Dakota can pay the full cost for a two-year vo-tech program; in return, recipients pay the state three years of their lives. The Opportunity Scholarship is maybe 10% of the cost of four years at SDSU. Should Opportunity Scholars thus face only 10% of the stay-in-state requirement we impose on BSD Scholars, say, four months?

I look forward to reading the particulars of Senator Frerichs’s bill and hearing the numbers that inform the debate over requiring Opportunity Scholars to pay us back by serving time in South Dakota.

19 Comments

  1. Tim 2017-01-02 15:17

    If the kids could make a decent wage here they might be more persuaded to stay. I’m sure that didn’t cross Senator Frerichs’s mind.

  2. MD 2017-01-02 15:33

    As a beneficiary of the opportunity scholarship, I would have seriously second guessed my decision to take the scholarship if there was a residency requirement after graduation. After graduating, I want to keep my eyes open to jobs, rather than having to narrow my search and potentially be stuck with unfulfilling employment, all to avoid having to pay back an additional $6,000 in student loans. College students are already heavily constrained by the student debt loads that they face, why add another burden.
    The opportunity scholarship serves an an olive branch to South Dakota students right now, lets not make it into an iron fist.
    Going forward though, we must know the terms of this program. What are the repayment terms if job opportunities take us out of state? Will I have to change my South Dakota Opportunity Scholarship into a Bank of North Dakota student loan? What recourse is there if jobs in SD are non-existent in your chosen field?

  3. Darin Larson 2017-01-02 16:05

    For $1,625 a year in scholarship money, we are going to try to restrict a student’s freedom? How is that going to go over with students? Like a lead balloon, I would say!

    By simply going to a South Dakota university, instead of an out of state school, the chances increase that a student will choose to stay and work in South Dakota, as Cory’s story points out. But, as Frerichs says, it is on us to develop the jobs to keep our kids here. That should be the focus.

    In a carrot and stick analogy to this situation, the stick of a scholarship penalty and restriction of freedom after graduation is going to be much less well received than the carrot of a SD scholarship to go to school in state without restriction.

    If a job isn’t available in their field here in SD, why would a top student go to university here if their scholarship is going to be taken away upon graduation? It is more likely that this penalty would drive them out of state from the beginning of their college career. They would go to a university in a state that has jobs in their field for internships, fellowships and the like. They also may decide they need to go out of state to a better ranked school in their field if they won’t get to keep their scholarship.

    On the other hand, if we maintain the current rules, a top student may stay in SD for college and their college experience here might convince them to stay here, either by changing fields or starting their own business here.

    We can’t bribe people with $1,625 a year for four years to stay here. They have to want to stay here and there has to be opportunities for these students either by way of jobs or home grown businesses.

  4. mike from iowa 2017-01-02 16:40

    Seriously, why can’t wingnuts do stuff to make South Dakota a progressive state with good, high paying jobs that would make students want to stay and live here. Very few people (sans the filthy rich) dread higher taxes if they feel they are getting the most bang for the buck. That does not mean more taxcuts for the wealthy. It means investing in infrastucture and businesses and appealing to industries to locate and thrive in the vast wasteland of Red Dakota. Taking advantage of federal government programs that help the needy with insurance and job training that pours mucho dinero into local economies. All you wingnuts need do is get over yourselves and your phony piosity and do what your lord and saviour told you to do. Treat the least of us with dignity and hope. We’ll make worthy humans out of some of you, yet.

  5. Rorschach 2017-01-02 17:04

    I don’t support a stay-in-South Dakota requirement for the opportunity scholarship for the same reasons already stated. Here’s an idea. How about if employers offer students scholarships that come with jobs, or jobs that come with tuition benefits?

  6. caheidelberger Post author | 2017-01-02 17:32

    I’m sure Senator Frerichs is keenly aware of wage issues. Perhaps, Tim, he’s trying to invite a bigger conversation?

    MD: olive branch vs. iron fist—I like that comparison. I’m sure the proposal cannot be retroactive—we won’t come after your money. But I share your eagerness to see the details.

  7. caheidelberger Post author | 2017-01-02 17:41

    I also like Darin’s word, bribe. We’re paying students to stay here. In the case of the Build South Dakota Scholarship, the price is right: two years free education for three years work.

    The Critical Teaching Needs Scholarship offers two years of free tuition for five years of service in South Dakota. My 2013 calculations said that scholarship wouldn’t compensate for lost earning potential.

    What price will the Opportunity Scholar market bear? How many career years will smart students surrender for how much free college?

  8. caheidelberger Post author | 2017-01-02 17:44

    Ah, Dec. 2016 meeting minutes indicate the Critical Teaching Needs Scholarship is capped at $4,300 a year. I wonder: does that get students to stay here who wouldn’t have stayed otherwise?

  9. Porter Lansing 2017-01-02 19:28

    “IRON FIST” Legislation from which political party? The one with the superiority complex? Uh, huh.
    ~ This could work, though. When the graduate takes a career position in SoDak, South Dakota will reimburse the student the difference between what they’re earning and how much they’d be earning in comparable employment in Southern California or New York City … including benefits and perks. If Senator Jason Frerichs (D-1/Wilmot) sees no issue with hanging carrots in front of graduates, lets hang a carrot in front of him and his Republican Party’s proboscis.

  10. o 2017-01-02 19:37

    Does $6,500 toward a $64,000 education ($16K X 4 years) really provide “opportunity?” Does this scholarship make the difference between attending college and not attending?

    I do like that this opens the discussion again about SD wages compared to our neighbors – especially now focused on the job market for college graduates (the heart and entry point of the new middle class).

  11. Porter Lansing 2017-01-02 19:53

    What? From a Democrat? It’s a wrong direction but at least a Democrat will be open to compromise. I’ll apologize to the SDGOP for pointing out their superiority complex and propensity to propose IRON FIST legislation. I believe I made this same reading error last time this issue was mentioned, here. Maybe, Senator Frerichs has been overly influenced? Maybe this is what a Dem has to do to get a gig in January in beautiful, downtown Pierre? Maybe it’s a dead idea just because of what party member came up with it? On with the show.

  12. Curt 2017-01-02 20:39

    Don’t worry – Trump will fix it.
    I’m pretty sure you would not believe how many times I’ve heard that in the last 50 days. So I do what they tell me and no longer worry. Life’s wonderful!

  13. Don Coyote 2017-01-02 21:30

    So what happens to a student who goes on to grad school out of state? My daughter graduated from SDSU and had to go out of state to work on her PhD in Chemistry with an emphasis on nuclear magnetic resonance spectroscopy. She certainly would have qualified for the Opportunity Scholarship since she was 1 of 12 Briggs Scholars at SDSU in the Class of 2004. ($6,500@year with no restrictions. Thanx Stephen Briggs and Outdoor Marine and Briggs-Stratton engines)

  14. moses6 2017-01-02 23:14

    I can only say my kids went to out of state schools. and all have very good jobs.Education great but low paying jobs just don;t get it.C.H. do you know what the average wage is in sioux falls

  15. caheidelberger Post author | 2017-01-03 10:07

    Coyote, Frerichs told KCCR that he’s open to exceptions for out-of-state grad school.

    Say, Briggs Scholarships (among my favorites!) don’t come with any post-graduation requirements, do they?

  16. caheidelberger Post author | 2017-01-03 10:11

    O, the Regents don’t appear to make any claim that the Opportunity Scholarship makes the difference between kids going to university or going to work. The Regents do assert some impact from the Opportunity Scholarship’s initial curriculum requirements on kids taking tougher courses, getting better ACT scores, and improving their college readiness.

  17. caheidelberger Post author | 2017-01-03 10:19

    Moses! Mean hourly wage in Sioux Falls, May 2015 BLS stats, was $20.01, 14% below national average. SF average wage was 3% higher than nat’l avg in Sales, but below nat’l avg in every other job category.

    SF median hourly wage was $15.59, 10% below the national median of $17.40.

    So let’s work with the lower median, since new university grads will be closer to starting wages. That $1.81 difference, multiplied by 40 hours a week and then by 50 weeks, is $3,620. Work two years in Sioux Falls median hourly wage instead of somewhere offering national median, and you give up $7,240 in pay, $740 more than the value of an Opportunity Scholarship.

  18. Don Coyote 2017-01-04 10:22

    @cah: So Frerichs is willing to cut slack for students who are continuing their education out of state? Really not fair to those students who are starting their careers now and delaying their graduate studies for later years when they might be able to better afford it or have the assistance of an employer.

    As for Briggs Scholarships, there were no restrictions post grad that I was aware of. My daughter was required as an undergrad to maintain a qualifying grad point (I forget what level), tutor students and write a yearly letter to the Briggs family about the progress of their studies.

  19. caheidelberger Post author | 2017-01-04 13:46

    And that would be another problem with what little we’ve heard about this suggestion so far. I could try to come up with a justification for a grad-school exception, like deferring student loan repayment for any student in graduate school, but I’m not advocating for the proposal to start with.

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