Social returns and the annual and long-term economic impact of higher education on the state of Maryland are assessed. Long-term impacts of colleges on economic growth include human capital formation, increased earnings of graduates, and provision of a trained labor force. Quantifiable economic impacts of higher education for fiscal year 1985 include these facts: colleges, students, faculty, staff, and their visitors spent $1.71 billion in Maryland, and from this spending, additional spending of $2.05 billion was induced; the total monetary economic impact of higher education was over eight times the state's investment (direct state appropriations); and higher education employed over 63,000 individuals, and was responsible for the employment of 120,000 additional people. Also of note is the fact that more education is linked to greater employment rates and higher salaries, as well as to payment of larger taxes. Finally, universities' research activities are important in attracting and keeping diverse industries in the state. A list of participating institutions is included, along with information on the derivation of an economic impact model and the methodology for estimating short-term economic impact. (SW)