A Conceptual Framework: Public and Private Benefits of Higher Education Jamie P. Merisotis, President The Institute for Higher Education Policy

Common Benefits and Common Responsibilities Financing of higher education is a topic that transcends national boundaries Role of higher education in economic and social development is growing THE INSTITUTE for Higher Education Policy

Concerns about financing are related to a variety of goals Massification of higher education Improved educational equity for historically disadvantaged populations Enhanced educational quality THE INSTITUTE for Higher Education Policy

Investment in higher education Investment in higher education has tangible benefits that are both public and private Public policy dialogue of investment must continue to reinforce these dual benefits THE INSTITUTE for Higher Education Policy

Why should an articulation of public and private benefits matter? In the absence of understanding benefits selective investment becomes possible When policymakers and the public do not realize the benefits, other public policy priorities may gain more support for funding THE INSTITUTE for Higher Education Policy

Other important reasons Scrutiny of higher education is increasing Calls for accountability combined with concern about tuition and payment mechanisms have realigned the public dialogue These concerns necessitate the need to catalog the benefits of higher education THE INSTITUTE for Higher Education Policy

Characterizing higher education’s benefits Attempts to characterize benefits are likely to be imperfect and incomplete –Imperfect because methods of classifying benefits as public or private are inexact –Incomplete because efforts to measure or describe them are sometimes difficult THE INSTITUTE for Higher Education Policy

Four categories of benefits Public economic benefits Private economic benefits Public social benefits Private social benefits THE INSTITUTE for Higher Education Policy

Specific private economic benefits The following chart compares the ratio of average annual earnings of tertiary graduates with those with less than a tertiary degree The resulting analysis shows that the earnings premium of university-level graduates is particularly high THE INSTITUTE for Higher Education Policy

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For example... In Canada the earnings of those with an educational level below upper secondary are 87% of those with a university-level education The earnings of those with a university- level education are 156% of those with an upper secondary education In Germany the percentages are 78% and 163% respectively THE INSTITUTE for Higher Education Policy

Private economic benefits The next chart examines the employment and unemployment rates of those with varying levels of education The employment rates of those with a university-level education are higher than for other groups, while their unemployment rates are lower THE INSTITUTE for Higher Education Policy

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For example... Data from Poland shows that the unemployment rate for those with a university-level education is 1.9% For those with only an upper secondary education the rate is 9.6% For those in Australia the rates are 2.9% and 5.9% respectively THE INSTITUTE for Higher Education Policy

Private social benefits We next examine the variations in health behaviors and experiences of the U.S. population according to educational attainment As the level of education increases so does the likelihood of behaviors and experiences considered healthy THE INSTITUTE for Higher Education Policy

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For example... The research shows that as the level of education increases so does the proportion of those who exercise or play sports regularly Additionally, the proportion of smokers declines as educational attainment increases THE INSTITUTE for Higher Education Policy

Public social benefits The next chart addresses participation in civic activities in the U.S. according to level of education Those with higher levels of education exhibit higher participation rates THE INSTITUTE for Higher Education Policy

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For example... While the national average for ongoing participation in a community service activity is 39%, it is 51% for those with a bachelor’s degree 91% of bachelor’s degree recipients voted in a national or state election within the past five years, compared to 74% of the total population THE INSTITUTE for Higher Education Policy

Public economic benefits The final chart shows the rates of participation in the main U.S. welfare program by level of education over a 25 year period Higher levels of education are equated with lower welfare participation rates THE INSTITUTE for Higher Education Policy

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For example... Over the entire period the participation rate for those with 16 or more years of schooling was less than 1% An unexplained rise in participation occurred in the years of schooling category beginning in 1991, but has since started to decline THE INSTITUTE for Higher Education Policy

Impact This brief tour of public and private benefits reminds us that –a broad range of benefits are derived from investment in higher education –despite the evidence, there is limited capacity to define the consequences of not investing in higher education THE INSTITUTE for Higher Education Policy

Consequences of diminishing public support Growing social and economic disparities Increasing public expenditures on social welfare programs Inability to compete in a technological society Stagnant or declining quality of living Decreasing health and life expectancy Diminishing civic engagement THE INSTITUTE for Higher Education Policy

In summary This discussion has shown that the public, private, social, and economic benefits of higher education are vast and important These benefits should be borne in mind by policymakers and the public as they struggle with the complexities of financing higher education THE INSTITUTE for Higher Education Policy