The steep cost of inequality in higher education

Eliminating educational attainment disparities across income levels and races/ethnicities is an expensive proposition. But failing to do so costs the United States nearly $1 trillion in lost economic benefit annually, according to a report published this week by Georgetown University’s Center on Education and the Workforce (CEW).

Currently, 57 percent of Americans with earnings in the top 60 percent hold an associate’s degree or higher, compared with 28 percent of earners in the bottom 40 percent. And while 46 percent of the nation’s white adults and 64 percent of Asian adults have an associate’s degree or higher, just 21 percent of Latino adults and 31 percent of Black adults report that level of degree attainment.

What if we could equalize attainment?

To better understand the implications of erasing those gaps, CEW researchers partnered with the Postsecondary Value Commission, an effort led by the Bill and Melinda Gates Foundation and the Institute for Higher Education Policy exploring how colleges and universities can equitably increase opportunity and economic mobility. 

The resulting “thought experiment” simulates the investment needed to equalize educational attainment by economic status and race/ethnicity—and the likely impact. It shows that, if degree attainment increased to the level of the top 60 percent of earners and white adults, 58 percent of the U.S. population would have an associate’s degree or higher—an 18 percentage-point increase. 

Achieving that change would require an initial investment of $3.97 trillion, the report says; doing so while eliminating the need for low-income adults to take out student loans would add $2.02 trillion to that amount. 

Gains outweigh costs

However, the increased attainment would produce $956 billion in public benefit annually, through increased tax revenue from higher earnings, along with increased spending on goods and services and decreased spending on criminal justice, public health, and federal assistance programs.

An approach ensuring that low-income graduates didn’t have student loan debt would further boost GDP by $222 billion annually. It also would set the stage for greater wealth accumulation across generations. Researchers say they would expect cumulative monetary gains to exceed cumulative costs after 17 years.

Those calculations, they note, do not even account for an array of nonmonetary benefits associated with degree attainment, such as improvements in civic engagement, health, happiness, critical thinking, and empowerment, as well as reductions in crime and authoritarian inclinations.

Noting that educational equality is often perceived as “too resource-intensive and expensive to achieve,” the researchers caution that “as a society, the United States loses more by not achieving equal educational outcomes than it would spend by investing in educational equality.”

Other forces could limit impact

However, the report highlights several limitations beyond the scope of higher education, including gender and racial wage gaps in the workforce. In addition, “the wealth problem is too big for education to solve alone,” lead author and CEW Director Anthony P. Carnevale said in a release. “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.”

Narrowing those gaps would require greater equality in the labor market, better representation of women and workers of color in high-paying fields, and better child and elder care, Carnevale and Kathryn Peltier Campbell write in Inside Higher Ed.

Start now, authors say

Artem Gulish, co-author of the report and senior policy strategist at CEW, adds that while the analysis focuses on long-term costs and gains, there are immediate changes that could advance the goal of greater racial and economic justice in postsecondary attainment. “The idea is not that we will instantaneously solve inequality,” he told Inside Higher Ed. “It should be an impetus to get started on all the changes and all the work that will be necessary to get there.”

The report authors urge policymakers to quickly take steps to mitigate inequalities, in part by addressing college access and affordability, student debt, community college funding needs, and obstacles to degree completion. They recommend strengthening wraparound supports such as counseling and mental health services, providing financial support to help students meet basic needs, and streamlining transfer pathways.

Noting the “untapped potential in the higher education system for unrealized public gains,” the researchers emphasize that “an investment in postsecondary equality is money well spent.”

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