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The fiscal impacts of college attainment

Author

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  • Philip A. Trostel

Abstract

This study quantifies one important part of the economic return to public investment in college education, namely, the fiscal benefits associated with greater college attainment. College graduates generally pay much more in taxes than those not going to college. Government expenditures are also generally much less for college graduates than for those without a college education. Indeed, over an average lifetime, total government spending per college degree is negative. That is, direct savings in post-college government expenditures are greater than government expenditures on higher education. Further, the direct extra tax revenues from college graduates alone are more than six times the gross government cost per college degree. Thus, in addition to the many other benefits from higher education, public financial support of college education pays for itself many times over. On average, government funding for higher education is a sound public investment, even if governments had no other reasons to promote and encourage college education and if the higher-education sector produced nothing but college-educated taxpayers.

Suggested Citation

  • Philip A. Trostel, 2007. "The fiscal impacts of college attainment," New England Public Policy Center Working Paper 07-2, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbcw:07-2
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    Cited by:

    1. Bo Zhao, 2018. "Disinvesting in the future?: a comprehensive examination of the effects of state appropriations for public higher education," Working Papers 18-1, Federal Reserve Bank of Boston.

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    Keywords

    Income tax; Education - Economic aspects; College graduates;
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