(CA) Study: Investing in higher ed will save California money later (UC Berkeley researchers)

ap on Bakersfield Californian ^ | 12/1/05 | AP

[NormsRevenge]

BERKELEY, Calif. (AP) - Investing in higher education could net savings for California taxpayers, a new study suggests.

That's because the number of people reaching college age is growing and if they don't have the opportunity to learn, taxpayers could end up paying for more people living in poverty and even in jail, according to the study by University of California, Berkeley researchers. The study, commissioned by the bipartisan Campaign for College Opportunity and released Wednesday, looked at the potential return on investing in education and the cost of doing nothing.

In general, the study found the state will get a return of $3 for every new dollar spent on community colleges, public universities and student financial aid. For every dollar not spent, the loss was two tax dollars.

California set a blueprint for investing in college with the 1960 Master Plan for Higher Education that guaranteed an education for qualified students. But over the years, state spending has slipped.

"This governor and the Legislature now have an opportunity, a precious window of time to ensure that college access is expanded for our growing young population," said Abdi Soltani, executive director of the Campaign for College Opportunity, a coalition founded by the California Business Roundtable, the Mexican American Legal Defense and Educational Fund and the Community College League of California.

Campaign leaders plan to use the report to talk about how to improve access to college. They are making a 20-city tour that began Wednesday in Sacramento and will continue through January. The campaign hopes to have a legislative agenda by spring.

[Lizavetta]

And the NEA is all about improving children's education.

I am reminded of the late Al Shankar, former president of one of the teachers' unions (NEA or CTA) who said something along the lines of when the children start paying dues they, the union, will start representing their interests.

[abigailsmybaby]

UC Berkeley researchers come to the conclusion that higer ed should get more taxpayer money?

That's pretty earth-shattering research. Who would ever have imagined they could come to that conclusion? Wonder how many months and how many taxpayer $$$ it took them to do this research?

[Arthalion]

Even accounting for inflationary pressures, it's still a dramatic net positive. According to this study (http://www.ericdigests.org/2003-3/value.htm), the average kid with a high school diploma in the US can expect to earn about $1.2 million over the course of his lifetime. A four year degree increases that number to $2.1 million. At a 15%-20% tax rate, this means improved tax receipts of $135-180k over that persons lifetime. Unless inflationary pressures explode, that's a net gain for the country no matter how you look at it.

And again, keep in mind that the rest of that income increase will be spent buying goods and services that will boost the rest of the economy too.

[Ninian Dryhope]

The income stream does not only have to be discounted due to inflation, it also has to be discounted by an appropriate discount rate.

Just taking the money and investing it in a mutual fund instead of spending it on education would increase not only by the rate of inflation but it would also increase at a compounded interest rate.

There is an opportunity cost to not investing the money in alternatives to educating youths. If you so not believe me, then give me a hundred thousand dollars today and I will pay you the hundred thousand dollars back to you in twenty years, plus the inflation rare.

In addition, a college degree in itself does not cause a person to earn more money. If it did, we could just issue all those youths a college degree and be done with it. That is almost what many of our poorer colleges are doing, only the students party for four years in the process.

Typically, those going to college in the past had higher IQs. Did those who had college degrees make more money because they had an education or because they were more intelligent than the average person? Most likely both.

If one attempts to educate a person of low IQ, you are wasting your and his time and he will never be able to meet the standards or you have to lower the standards so low so that he can pass them that you might as well simply hand him a degree since in either case, the degree is not worth the paper it is printed on.

To make the point that since in the past (all the data is necessarily historical when one is talking about income differences over a lifetime) that the most intelligent twenty percent of the population who also had college degrees made more money over a lifetime than those who did not have college degrees and therefore posit that if we spend four or five years trying to educate a person who is of low or average intelligence and who is not well prepared academically for college, since they studied very little in grade school and high school, they will also earn more money over a lifetime is very poor logic.

NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account.