The Investment Payoff: A 50-State Analysis of the Public and Private Benefits of Higher Education

A major new study shows that the investment in higher education by states has dramatic and measurable impacts on both the collective well-being of each state as well as on individual citizens.

The 50-state study says that the societal benefits of citizens with a college education are widespread and include decreased reliance on public assistance, higher voting rates, and increased volunteering. For individuals, going to college leads to higher income, lower unemployment, and better health. State policymakers should more carefully consider these important public and private benefits, the reports says, when making funding decisions for higher education.

Does college matter?

In the last few years, a number of important eff orts have
been made to better articulate the benefi ts that result from the investment in
higher education, both to individual students and to society.

Several national
organizations have made the public good of higher education a key theme of their
ongoing work, ranging from the National Forum on Higher Education for the Public
Good to the Association of American Colleges and Universities, among many others.
Reports and studies also have been published that attempt to articulate the broad
benefi ts of higher education, including the College Board’s Education Pays report
(College Board, 2004), the National Center for Public Policy and Higher Education’s
Measuring Up (2004) publication, and other highly regarded studies. These studies have
consistently shown that going to college has broad and quantifi able national impacts,
from higher salaries to improved health to increased volunteerism to a reduced reliance
on welfare and other social support programs. In addition, these impacts occur over and
above the eff ects of mediating factors such as income and age.

This report builds on the work of these ongoing eff orts by articulating the benefi ts of
higher education on a 50-state basis.1 The framework used for this analysis is taken from
a precursor to the aforementioned recent national eff orts, a 1998 Institute for Higher
Education Policy report, Reaping the Benefi ts: Defi ning the Public and Private Value of Going
to College. That report off ers a detailed historical perspective and contemporary catalog
of benefi ts. Perhaps its most enduring contribution, however, is a simple matrix that
groups the benefi ts of higher education into four major categories: public economic
benefits, private economic benefits, public social benefits, and private social benefits
(Figure 1). This matrix, which has appeared in forums ranging from the fl oor of the U.S.
Senate to World Bank publications, includes 20 diff erent types of benefi ts that can be
characterized. This extensive though far-from-complete list of the benefi ts of higher
education has become of increasing interest at the state level as policymakers seek to
better understand how the investment of state tax dollars pays off .

Like the federal government, state governments make a sizeable and vital public
investment in postsecondary education. In fact, during academic year 1980-81,
appropriations from state and local governments comprised nearly half of total revenue
for public colleges and universities. By 1999-2000, however, only about one-third of
public institutional revenues were provided by state and local governments (NCES, 2004).

Unfortunately, the proportion of total revenues provided to public institutions through
state and local appropriations decreased dramatically during the 1980s and has never fully
rebounded. Yet this support for postsecondary education is an investment that has return
benefi ts for both state and local governments and citizens living there.

Our goal for this study is to demonstrate that the same benefi ts that are found at
a national level are also evident at the individual state level, and need to be taken into
account in state policy discussions. A total of six measurable indicators from among
those originally formulated in Reaping the Benefi ts have been articulated for all 50 states
in this report. These six indicators represent each of the basic components of the foursquare
benefi ts matrix. Moreover, the data to assess these indicators are readily available
for all 50 states.

The following benefit indicators are quantified for all of the states:

◗ Private economic benefits: higher personal income, and lower unemployment;

◗ Public economic benefits: decreased reliance on public assistance;

Full Report: http://www.ihep.org/Pubs/PDF/InvestmentPayoff2005.pdf