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ERIC Number: ED519494
Record Type: Non-Journal
Publication Date: 2011-May
Pages: 40
Abstractor: ERIC
Reference Count: 0
ISBN: N/A
ISSN: N/A
Who Wins? Who Pays? The Economic Returns and Costs of a Bachelor's Degree
de Alva, Jorge Klor; Schneider, Mark
American Institutes for Research
Given the importance of a college education to entering and staying in the middle class and the high cost of obtaining a bachelor's degree, "Who Wins? and Who Pays?" are questions being asked today at kitchen tables and in the halls of government throughout the nation. Using publicly available data, the authors look at who wins and who pays across the full spectrum of higher education institutions in the United States, combining information on "institutional control" (public, private not-for-profit, or private for-profit college or university) and selectivity (ranging from open admission to most selective, based on "Barron's Profiles of American Colleges"). The authors focus on two critical questions: (1) Do students who earn a bachelor's degree and participate in the labor force experience returns, such as higher wages, that justify the costs incurred by them in earning that degree?; and (2) Do taxpayers get a positive return on their investment in the nation's colleges and universities? The answer to the first is "yes." In terms of wages, a bachelor's degree, whether from a public, a not-for-profit, or a for-profit institution, pays a handsome net financial reward in comparison to a high school diploma--a reward that over a lifetime can vary, on average, from more than $230,000 at less selective not-for-profit colleges (such as the University of Bridgeport in Connecticut and Dowling College in New York) to well over $500,000 at the most competitive public or not-for-profit institutions (such as the University of California at Los Angeles and Amherst College). The answer to the second question is more complicated. Taxpayers benefit from the higher state and federal income taxes paid on the higher salaries earned by college graduates, varying from $60,000 in additional taxes paid over the work life of a graduate from a less selective public institution to almost $150,000 in additional income taxes paid over the work life of a graduate from the most selective not-for-profit colleges or universities. However, taxpayers also subsidize the education that students receive in most colleges and universities. Because for-profit institutions do not receive state subsidies and pay taxes rather than receive tax exemptions, even after including the cost of government-funded financial aid, taxpayers benefit by around $6,000 per bachelor's degree. Methods, data sources, and tables are appended. (Contains 15 tables and 65 footnotes.)
American Institutes for Research. 1000 Thomas Jefferson Street NW, Washington, DC 20007. Tel: 202-403-5000; Fax: 202-403-5001; e-mail: inquiry@air.org; Web site: http://www.air.org
Publication Type: Numerical/Quantitative Data; Reports - Research
Education Level: Higher Education; Postsecondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: American Institutes for Research