Higher Education: Economic Impact

By Caroline Mathews, Trending Writer

Higher education, unequivocally, is a crucial mechanism for driving socioeconomic advancement as well as improving economic mobility within the United States. Furthermore, an increasingly globalized corporate America—as well as the rest of the business sector—require competitively skilled workers. While higher education, financed through a complex public-private market, has become significantly more important over the past decade, it has also raised a great deal of affordability and accessibility concerns.

Posted tuition—not including living costs and not accounting for financial aid—has risen aggressively within the past two decades at both public and private colleges. The College Board acknowledges a price-increase in 2000 that doubles tuition cost from 1980. However, the College Board also reports that net tuition (posted tuition less grants & tax benefits) has increased at a more moderate rate, as financial aid has increasing correspondingly. Student debt has also risen sharply in the United States over the past 20 years and totaled over $1.3 trillion according to an August 2016 economic report by the Council of Economic Advisers. With a rising number of students taking out loans—estimated at about half the student body—the country has questioned whether we are entering a student-debt crisis.

The Department of Education and Department of the Treasury’s 2012 research and data has shown that, on average, student loans provide college graduates with a particularly strong investment. The college “skill premium”—quantified by the wage difference between college and high school graduates—has, like tuition costs, grown steadily over the past decades. It has also been claimed that those with bachelor’s degrees typically earn approximately $500,000 more over their lifetime; student debt accumulations average around $30,000, leaving a $470,000 net profit for borrowers.

The bottom-line? Even when financed by debt, higher education provides net positive for both the economy and the graduate.


A version of this article appeared in the Tuesday, November 21st print edition.

Contact Caroline at



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