Study: Economic Impact of College –

Online degree programs are making a college education increasingly accessible, and college enrollments are on the rise, but higher education continues to face the widening gap between increasing costs, and declining funding.

A recent joint study from the Department of Treasury and Department of Education examined the economic impact of higher education, the economic mobility of degree-earners, and the state of tuition and financial aid.

As tuition goes up and state funding dollars are spread even thinner, the study showed that the federal government has stepped up its support, but students and families are still incurring a greater percentage of college costs:

  • State funding has decreased from 60% of college revenue in the 1980s to below 40% today.
  • The lack of state funding makes students and schools more reliant on Federal Financial Aid, which distributed $124 billion to undergraduates in 2009-2010.
  • In 2011, students received $35 billion in Pell grants.
  • About $90 billion was distributed to students for Stafford loans.

The Obama Administration introduced a number of initiatives to offset the cost of college:

  • The American Recovery Reinvestment Act increased the maximum Pell grant award from $4,731 in 2008 to $5,550 in 2010.
  • The American Opportunity Tax Credit increased the amount parents of college students could save on their taxes from $1,800 to $2,500, and extended the duration of the credit from two to four years.
  • Subsidized Stafford loan interest rates remained at 3.4% instead of increasing to the previously scheduled 6.8%.
  • The “Pay As You Earn” program will allow students to repay students loans based on their income, beginning this year.

  • Enrollment trends show that the majority of college students attend public colleges and universities, but private, for-profit schools are gaining ground as the fastest growing college destination:
  • Nearly 73% of American college students attend public schools including two-year community colleges, four-year institutions, and graduate research institutions.
  • 18% attend private non-profit colleges and universities
  • 9% attend private, for-profit schools, which have seen a growth of 200,000 in the late 1980s to about 2 million today.

The study showed that getting a college degree pays off in terms of lifetime earning potential and helps break the cycle of poverty:

  • A college graduate with an undergraduate degree working full time in 2011 earned 64% more per week than someone without a college degree.
  • College graduates are also more likely to hold jobs that offer non-salary compensation such as paid vacation, sick pay and insurance.
  • Children born into the bottom income quintile have a 45% chance of remaining at the same income level as adults
  • College graduates have less than 20% chance of remaining in the same income distribution level.

Follow Elise Rambaud Marrion on Twitter @elisermarrion.