Leveling inequities in the U.S. higher education system would require an investment of nearly $4 trillion but could lead to annual public benefits that would recoup those costs in 10 years, a new study argues.
The simulation by the Georgetown University Center on Education and the Workforce (CEW), published in partnership with the Postsecondary Value Commission, found that the U.S. economy "misses out on $956 billion dollars per year, along with numerous non-monetary benefits, as a result of postsecondary attainment gaps by economic status and race/ethnicity."
The analysis was based on an initial public investment of $3.97 trillion that would result in an estimated $956 billion in total annual public benefits from an estimated $542 billion annual boost to U.S. GDP, $308 billion annually in new tax revenue, and the decrease of various annual costs over time.
“Economic and racial justice are good for public finances,” lead author and CEW Director Anthony P. Carnevale stated. “Our thought experiment revealed the untapped potential in the higher education system for unrealized public gains.”
The level ambitious would be remarkably ambitious: For comparison, President Joe Biden's proposed American Families Plan has a heavy focus on child care and education at a cost of roughly $1.8 trillion.
"We found that while equalizing educational attainment would be costly and time-intensive, balancing the costs with the potential societal benefits makes it clear that an investment in postsecondary equality is money well spent," the researchers stated.
Within a decade, according to the study, the program would pay for itself.
"In purely monetary terms, an investment in postsecondary equity would pay for itself in a reasonable timeframe," the authors asserted.
Differences in attainment
There are clear racial and economic inequities when it comes to attainment in the American higher education system.
The Georgetown team found that Hispanic, Black, and Native American populations in the U.S. lag behind Asian and white Americans in terms of the levels of educational attainment.
There's also a difference in terms of class and educational attainment: Among the Americans in the top 60% of household income, 57% earned at least an associate's degree.
Among the bottom 40% of earners, meanwhile, 28% earned at least an associate's degree.
With a large and well-utilized investment, according to the study, the amount of Americans to earn at least an associate's degree would increase by nearly 30 million people across demographics and classes.
"Increasing educational attainment as described above would mean increasing the number of people with an associate’s degree or higher by 12.9 million low-income white individuals, 10.2 million Latinx individuals, 5.9 million Black individuals, 498,000 Asian individuals, 462,000 [indigenous] individuals, and 457,000 individuals of other races and ethnicities," the study estimated.
The researchers further argued that if the government were to take the additional step of eliminating student loan debt for low-income students who obtain new credentials, the increase in their earnings among the affected population could result in a further GDP boost of $222 billion annually.
On the other hand, the authors argued, by "allowing postsecondary inequality to persist, society is losing out on considerable economic potential related to such changes as increased tax revenue and GDP; decreased spending on criminal justice, public health, and public assistance programs; and smaller gaps in earnings and, thereby, potential cumulative savings, which contribute to wealth accumulation."
In any case, the researchers stressed that America's inequity problem is "too big" for an investment in only educational attainment to fully solve.
“Education can’t erase gaps created through centuries of oppression and discrimination, and it can’t compensate for gaps perpetuated through intergenerational transfers of wealth and through social and economic systems that protect the assets of the privileged," Carnevale said.
Aarthi is a reporter for Yahoo Finance. She can be reached at firstname.lastname@example.org. Follow her on Twitter @aarthiswami.