How $6 trillion could help close attainment gaps
What would it take to close equity education gaps in the United States?
About $6 trillion, according to a new “thought experiment” done by the Georgetown University Center on Education and the Workforce (CEW).
Given the anxiety and political backlash that the $1.9 trillion American Rescue Plan Act faced when approved in March, any massive investment – be it from government or any other source – likely would face enormous scrutiny.
But in the CEW’s research and report The Cost of Economic and Racial Injustice in Postsecondary Education, it proposes that a substantial down payment now could reap even bigger benefits in the future – namely the upward mobility of underserved racial groups as well a boost to the U.S. gross domestic product (GDP).
In its report, CEW researchers and the Postsecondary Value Commission note that the effect of ensuring that larger populations earn an associate’s degree or higher while not having to take on student loan debt would increase public benefits by $956 billion per year.
“Education increases lifetime earnings, creating a financial safety net for individuals and families and enabling them to slowly accumulate wealth and eventually pass it on to future generations,” report author and CEW Director of Research Jeff Strohl said.
Of the $6 trillion, an initial investment of $3.97 trillion would go toward achieving educational attainment among various racial groups. Another $2 trillion would come gradually through the elimination of student loans.
It is a hefty price to pay – and one that wouldn’t completely solve earning gaps due to “the impact of labor-market discrimination”, but it would empower far more individuals across classes to achieve, to save and to spend, fueling what would be a sizable annual boost to GDP. And individuals would see savings grow by a collective $600 billion more than if they had to pay for student loans, for example.
The great divide
Currently, the majority of top earners in the U.S. have associate’s degrees or better, and that typically falls across racial lines. Asian (64%) and White (46%) adults disproportionally have earned that postsecondary status compared to Black (21%) and Hispanic/Latinx (21%) individuals.
If attainment could be leveled – which would increase every subgroup’s numbers including Hispanic/Latinx degree holders by 10.2 million and White individuals by 12.9 million, for example – it not only would help bottom lines, but also increase critical thinking, foster civic engagement, reduce leans toward authoritarianism, improve health and increase happiness, the CEW report notes. That investment alone would boost the share of adults with associate’s degrees or higher by 18%.
“Economic and racial justice are good for public finances,” lead author and CEW Director Anthony Carnevale said. “Our thought experiment revealed the untapped potential in the higher education system for unrealized public gains.”
The CEW noted just a few of the outcomes that could be realized through that investment and higher education attainment:
- Higher earnings among workers could yield a $308 billion increase in tax revenue
- Spending increases on goods and services could boost GDP by $542 billion
- An annual savings of $13.8 billion in public criminal justice costs by reducing the number of incarcerated people
- An annual savings of $58.7 billion on public health expenditures
- An annual savings of $33.7 billion from a reduced need for federal public assistance programs
Of course, leveling the education playing field still wouldn’t solve gaps created by historic personal wealth achieved over many years by Asian and White citizens, especially those where inheritances are factored. But it would be a start, and higher education institutions can play a part in ensuring those subgroups are given the chance to succeed and have supports to build future wealth.
“The wealth problem is too big for education to solve alone,” Carnevale said. “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.”