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ATLANTA – A student’s access to Georgia’s 17 public four-year universities in the University System of Georgia (USG) leads to substantial economic benefits later in life, particularly for those who just meet the minimum admission criteria, according to new research at Georgia State University.
The annual household income at age 30 for such students who attended USG universities is about 20 percent higher than that of those who did not attend, the research showed.
These gains began with their increased enrollment and completion rates. Jonathan Smith and his co-authors focused on more than 120,000 Georgia high school students who first took the SAT too late to retake it before admissions deadlines. Those who scored just above USG admissions thresholds were 17 percent more likely to enroll in a USG university than those who scored just below, many of whom enroll in public two-year colleges. Starting at a USG university likewise increased their chances of earning a bachelor’s degree by 38 percentage points.
For these students, enrollment in a University System of Georgia university substantially raises their household income around age 30 by more than $11,000. This boost is driven by students from low-income high schools, whose household income increase was almost 40 percent.
“Our work makes clear that access to four-year universities within the University System of Georgia yields clear labor market returns,” said principal investigator Smith, an economist in Georgia State’s Andrew Young School of Policy Studies and a faculty affiliate of the Georgia Policy Labs.
“Additionally, we found little evidence that the student loan balances of those enrolled in a USG university are much different than for those who attend lower-tuition colleges. The short-run increases in tuition are rapidly offset by increased income, making the payoff to starting at a public four-year university positive and large in a relatively short period of time.”
Smith and his co-authors also computed the public return on investment for the state, balancing Georgia’s increased college expenditures at four-year universities per additional student against the increased state income tax revenues generated from his or her increased earnings.
“After 10 years, the state roughly breaks even on its initial investment. After 30 years, the net present value of that investment is close to $10,000,” said Smith. “A large increase in income tax revenue generated by the additional bachelor’s degree completion more than offsets the cost of subsidizing the student’s education. Had we accounted for additional benefits to the state, like sales tax revenue and healthcare costs, this calculation would have likely been even more favorable to Georgia.”
The study, published through the Georgia Policy Labs and National Bureau of Economic Research, is the first to estimate the economic impacts of American students’ access to higher education for the entire sector of a state’s university system. Its co-authors include Joshua Goodman of Brandeis University and Michael Hurwitz of the College Board.
“Two-thirds of American college students seeking bachelor degrees initially enroll in public four-year colleges and universities, which are at least partially subsidized by state appropriations,” Smith said.
Featured Researcher
Jonathan Smith
Assistant Professor
Department of Economics
Jonathan Smith is an Assistant Professor of Economics at Georgia State University. His research focuses on the behavioral and institutional factors that determine how students transition from high school to college and the consequences of those decisions. His research is published in leading economics, policy, and education journals including the Journal of Labor Economics, Journal of Human Resources, and the Journal of Policy Analysis and Management, and has been featured in numerous media outlets, including the New York Times. Prior to GSU, he worked as a Policy Research Scientist at the College Board. Dr. Smith received his Ph.D. in economics from Boston University and a B.A. in economics from Tufts University.