The Economic Importance of Higher Education

A recent article from Institute for Higher Education Policy (IHEP) notes, “Economists have long focused on the concept of education as an investment that, on average, pays off well over the long term, for both individual students and society as a whole. Yet many families lack faith in that premise.”

In today’s challenging economy with high unemployment rates and college tuition costs increasing faster than inflation, there are many skeptics who doubt whether college is a worthwhile investment.

What most agree on is that a college education is expensive. For 2011-2012, CollegeBoard states that the “average cost of tuition and fees was $28,500 at private colleges and $8,244 for state residents at public colleges.”

However, there are a variety of grant aids, loans, and tax credits available to help decrease tuition prices. Each year, state and local governments spend an average $169 billion on their higher education institutions, much of which is put towards subsidized tuition, in addition to “$15 billion in grants to about 5.5 million students, $8 billion per year in tax credits, and [awards] grants over $85 billion in loans.”

Despite the high costs of a post-secondary education, the long-term benefits greatly are significant. For example, in order to become successful in the workplace, it is increasingly important to have some sort of a college degree. Unemployment is currently twice as high for those with only a high school diploma in comparison to those with a post-secondary degree, and by 2018, two-thirds of new and replaced jobs will require some form of post-secondary education.

Not only will attaining a degree help students attain and keep a job, but it will result in greater salary potential. According to the U.S Labor Census Bureau’s figures for 2008, the average earnings of full-time working individuals with only a high school diploma was $34,200, while having a four-year bachelor’s degree earned individuals approximately $57,000. Recent research shows that average college graduates will earn about a million dollars more over the course of their careers than an individual with only a high school education. Furthermore, “a percentage of those extra dollars is returned many times over to the same federal, state, and local treasuries that financed those students’ education.”

It’s difficult to deny that investing in higher education carries significant value, and is the best way to ensure job security and to actualize earning potential. Analyzing the costs and advantages of acquiring a college degree, it becomes evident that higher education is a valuable investment.

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