New National Report: “The Investment Payoff”

States Gain Major Benefits from Inverstment in Higher Education

• New 50-state study documents widespread and dramatic impacts of going to college—lower unemployment, less reliance on public aid, higher voting & volunteering rates
• State-level investment in higher education may improve economic development, social stability, and individual prosperity, report says

Washington, D.C., Feb. 10, 2005—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.

The report, “The Investment Payoff: A 50-State Analysis of the Public and Private Benefits of Higher Education,” was produced by the Washington, DC-based Institute for Higher Education Policy, a non-profit, non-partisan research organization, with a grant from Lumina Foundation for Education.

On a state-by-state basis, the analysis shows that almost every state benefits from higher education in every indicator, though some states benefit more than others. For example, in every single state, postsecondary education is correlated with decreases in unemployment and increases in volunteerism. An expanded understanding of these benefits in individual states, the report says, “could go a long way toward improving the prospects for state economic development, social stability, and individual prosperity.”

National averages show that the benefits are widespread and dramatic. For example, in March 2004, 6 percent of the population nationwide age 25 and older with a high school diploma was unemployed, compared to only 3 percent for those with a bachelor’s degree. Similarly, in September 2004, 21 percent of the population age 25 and older who had a high school diploma reported volunteering, compared to 36 percent of those with a bachelor’s degree or higher. Even welfare program participation is impacted by college-going: less than one-half percent of those with a bachelor’s degree received some form of public assistance in 2003, compared to 1 percent of those with a high school degree and 2.1 percent of those with less than a high school diploma.

Using readily available data from the U.S. Census Bureau, the report breaks down six different indicators of the benefits of higher education for all 50 states. For each state, the study documents these benefits for state residents by education level, ranging from those with less than a high school diploma to those with a bachelor’s degree or higher. The six indicators are: personal income, unemployment rates, receipt of public assistance (welfare), health status, volunteerism, and voting participation. Tables in the report list each indicator for all 50 states.

“As policymakers seek to better understand how investing state tax dollars in higher education pays off, it is important to clearly articulate the specific benefits of that investment both to the individual and to society,” said Jamie P. Merisotis, president of the Institute for Higher Education Policy. “This study shows that the state investment is not only worthwhile, but has significant return benefits that are quantifiable.”

"With the rising cost of college, this report serves as an important reminder that the investment pays off—for students and families and for individual states and our nation as a whole," said Lumina Foundation president and CEO, Martha D. Lamkin. "We believe postsecondary education is one of the most beneficial investments individuals can make in themselves and society can make in its people. The Investment Payoff demonstrates this principle in convincing, quantifiable terms." The broad array of benefits of higher education for both individuals and society has become a topic of increasing interest in recent years. This study builds on these previous efforts by calculating state-by-state benefits for a select set of six indicators taken from a much broader list of more than 20 different indicators identified in national-level research. The study does not attempt to explain why some states might fare better on certain indicators than other states; the report does suggest additional research in this area.