How much does each college degree cost taxpayers?

Thought this might interest those watching the state higher-ed budget.

A new report announced today by the American Institutes for Research (AIR) and Nexus Research and Policy Center (Nexus) claims to be the first to determine whether states and taxpayers are getting a fair return for their higher-ed tax dollars.

The main findings:

  • Taxpayer subsidies that cover the operating costs of most colleges and universities ranges from around $8,000 to more than $100,000 for each bachelor’s degree awarded, with most public institutions averaging more than $60,000 per degree. (The financial figures reflect the amount of money colleges and universities receive in direct government support and tax breaks. They do not include loans and grants provided by state and federal governments to help students meet tuition costs.)

  • Among elite private universities, like Harvard and Yale, the average taxpayer subsidy is $13,000 per student per year, while the annual subsidy at the most selective public universities, like the University of North Carolina, Chapel Hill, and the University of California, Los Angeles is more than $23,000 per student annually.

  • Taxpayers benefit from the higher income taxes paid on the higher salaries earned by college graduates, ranging from $50,000 in additional taxes paid over the work life of a graduate from a less selective not-for-profit institution to almost $150,000 in additional income taxes paid over the work life of a graduate from the most selective not-for-profits.

  • Taxpayers subsidize the education that students receive in most colleges and universities. Each student earning a bachelor’s degree at a public college or university accounts for more than $60,000 in subsidies to the institutions.

  • Among open admission and less selective schools, taxpayers – on average – paid almost $8,000 per student at not-for-profit institutions.

  • The subsidies increase dramatically among the most selective institutions, from almost $60,000 in not-for-profit institutions to nearly $110,000 in the most selective public institutions.

  • Less selective private institutions, both not-for-profit and for-profit, generate “a much better bang for the taxpayer buck.”  For-profit colleges, for instance, give taxpayers a net gain of more than $6,000 per bachelor’s degree.  For the same degree, equally selective, private not-for-profit schools post a net taxpayer cost of $8,000; however, comparable state schools are at a net cost of more than $60,000 per degree.

Its conclusions:

  • Given the financial return to graduates for each completed bachelor’s degree, the high cost of dropouts, and the high dropout rates in less selective public colleges and universities, the states and the Federal Government must focus their resources and policies on increasing retention and degree completion at less selective institutions.

  • Given that the lowest levels of taxpayer support go to the institutions that enroll the highest percentage of students from low-income families, nontraditional students, and minority students, the states and the Federal Government must reverse their policies and focus their support for completion on the neediest students.

  • Given that the research on cost shows that not-forprofit and for-profit institutions are the best deal for taxpayers, to lower cost and increase capacity, the states and the Federal Government should support high-quality, nontraditional providers.

  • Given that state and federal policy discussions concerning how and who to fund must be informed by reliable data drawn from institutions across all types of control and levels of selectivity, the states and the Federal Government should move to make such data available, and the latter should move to scrap the antiquated and inadequate federal Integrated Postsecondary Education Data System (IPEDS) in favor of a data system based on student-level data that can measure the success of the growing number of “nontraditional” college students, who now make up the majority of postsecondary students in the country.

Read the full report here.

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