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New Hampshire's college-cost disaster

Getting a college education has created something of a Catch-22 for today's young Americans. Without a college degree, climbing the socioeconomic ladder is harder than ever. Yet getting a degree often means taking on a heap of debt, crimping their ability to get ahead.

That's caused a $1.2 trillion student debt crisis, sparking finger-pointing and blame on issues ranging from soaring administrative hiring and pay to expensive campus building projects. But research has shown that a major culprit is state cuts in support for higher education. Perhaps nowhere is that more evident than in New Hampshire, according to a new report from Demos, a left-leaning think tank.

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New Hampshire's investment in its higher education system has declined 43 percent from a peak of $153.8 million in 2008 to a low of $87.3 million in 2012, according to Demos. Because of that, costs have increasingly shifted to students and their families, who now pay the highest average tuition in the country.

At the same time, family income isn't keeping pace, which means more students are left holding large amounts of debt than previous generations, potentially endangering the state's middle class for years to come.

The report studied New Hampshire "because of how shocking the numbers were," said senior policy analyst Robert Hiltonsmith. "Every time there's a recession, we see higher education is the first thing that gets cut, because it's the easiest thing to cut."

Declining state appropriations for higher ed are responsible for more than three-quarters of tuition hikes between 2001 to 2011, Demos found in a study published earlier this year. Lawmakers slashed spending during the recession to cope with lower tax revenue, but they haven't restored those dollars despite a recovering economy. One reason: Many politicians are reluctant to increase taxes, Hiltonsmith noted.

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Demos' study coincides with a plan unveiled today in New Hampshire by Democratic presidential candidate Hillary Clinton. "The New College Compact," as she calls it, promises to ensure that students can graduate from a four-year public college without incurring debt, while graduates now struggling with loan repayments could refinance their debt at significantly lower rates. The cost, however, isn't minimal. The Clinton campaign pegs the outlay at $350 billion over 10 years.

The student debt level "is really a burgeoning crisis," Hiltonsmith said. "If we act in the next five years, we can prevent the worst. It won't be a crisis like the housing market crisis, but it'll be a long-term heavy weight on the economy that slowly drags us down."

Clinton's plan is "very comprehensive," he added, because it will help future grads avoid debt, thereby giving a boost to middle-class and lower-income families who otherwise would rely on borrowing to fund college degrees.

In New Hampshire, average yearly tuition and fees at its public four-year institutions has surged by 161 percent, or $9,105, over the past two decades. It now has the highest average student debt in the country, at $31,408 per student, according to Sen. Jeanne Shaheen, D-N.H.

That's because families and students remain relatively price-insensitive, given that a college diploma guarantees higher lifetime earnings and opens more professional doors. "Higher education is the last pathway to ensure a middle-class lifestyle," Hiltonsmith said. "People will pay any price for it."

While college affordability has become a hot-button topic, the rising cost of a higher education hasn't dissuaded students from enrolling. In New Hampshire enrollment has jumped by about one-third from 1991 to 2013.

But that popularity doesn't mean it's in the country's best interest for students to take on increasingly large amounts of debt to finance their college educations, given the long-term implications. More than half of millennials are delaying major life events such as buying their first homes because of their student debt, a Bankrate survey found last week.

New Hampshire's students may be more at risk than those in states that provide more generous support, Demos noted.

"Payments on the sky-high student debt of New Hampshire's graduates will consume large portions of their income, limiting their economic value of their degrees and consequently their contribution to the state's economy," the report said. "New Hampshire is endangering the quality of its institutions of higher learning, threatening the state's economic competitiveness and the future of its young people."