Dr. Jonathan Smith, Assistant Professor in the Department of Economics at Georgia State University, and his co-authors, have been studying the economic benefits of students’ access to Higher Education in Georgia. They have found that for every student who enrolls in a University System of Georgia (USG) university, their household income around age 30 increases by more than $11,000. The income boost is partly driven by students from low-income high schools, who saw a 40%increase in household income. Students who only meet the admission and attend a USG university have a 20%higher household income at age 30 than those who did not attend. This study highlights that student access to USG undergraduate programs demonstrates clear labor market returns. While there are no differences in the student loan balances for USG students compared to students in lower-tuition colleges, the increased income for USG students offset the short-run increases in tuition.
The authors also investigated the return of investment for the state of Georgia. They found that after ten years, the state breaks even on its initial investment via the increased state income tax revenues generated from the students’ increased earnings. The authors conclude that “a large increase in income tax revenue generated by the additional bachelor’s degree completion more than offsets the cost of subsidizing the student’s education. Had we accounted for additional benefits to the state, like sales tax revenue and healthcare costs, this calculation would have likely been even more favorable to Georgia.”
The study was published through the Georgia Policy Labs and National Bureau of Economic Research. It says it is the first study to estimate the economic impact of American students’ access to higher education. Co-authors are Joshua Goodman of Brandeis University and Michael Hurwitz of the College Board. The findings have huge implications since, according to Smith “Two-thirds of American college students seeking bachelor’s degrees enroll initially in public four-year colleges and universities, which are at least partially subsidized by state appropriations.”