of Higher Education
To the Individual and to the State
Public universities like Plymouth State University provide value to New Hampshire. They educate and prepare students to meet the needs of the state by graduating teachers, nurses, government staffers, counselors, businesspeople, cultural leaders, artists, and more. Plymouth State University’s learning model provides ‘real world’ opportunities for students to apply their knowledge. Having made contacts with New Hampshire businesses, non-profits, and/or government entities, graduates leave the institution well tuned into the State’s needs and networks.
When people talk about the value of higher education, they tend to refer to its value to the individual. It’s true: the college earnings premium is real and increasing. In 1980, college graduates earned 20% more than a high school graduate; in 2018, college graduates earn 80% more than those with solely a high school diploma.
Less well known is that individuals with four-year degrees also benefit from their college degrees in other ways: better fringe benefits, reduced risk of unemployment, better health and reduced risk of disability, reduced risk of imprisonment, a 25% lower mortality rate, and increased social mobility. Best of all, four-year college graduates have greater life satisfaction.
Even more surprising is that society benefits from college graduates. Areas with large numbers of graduates who have four-year degrees have greater tax revenues plus lower incidences of poverty, unemployment, disability, and more, thus reducing spending on public assistance and social insurance freeing government resources for other programs. These communities have lower crime rates and a reduction of the dollar value of harm to crime victims, increased volunteerism and civic engagement, and increased charitable contributions. In fact, there appears to be a productivity spillover effect to those without a four-year degree for those who live in a high college-attainment society.
The fiscal bottom line: from the taxpayers’ point of view, each potential college degree is conservatively worth $381,000 ($510,000 in various fiscal benefits minus the $130,000 cost). Net government spending per college degree is negative: the reduction in spending after college is greater than public spending on college education. For New Hampshire, the real internal rate of return for public degrees is 4.0%.
As state funding declines, college debt has gone up. “College debt makes a gray state grayer” and has led to growing workforce concerns. New Hampshire’s funding for higher education is still 26% below pre-recession funding levels. Granite State students graduate with greater debt loads, which leads many to seek jobs elsewhere. Additionally, 60% of NH high school graduates who go to college choose to leave to get their education often due to the cost of higher education in New Hampshire. Few in either group return to live in our wonderful state.
States cannot afford not to invest in higher education.