The fiscal impacts of college attainment

Philip Trostel

No 07-2, New England Public Policy Center Working Paper from Federal Reserve Bank of Boston

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.

Keywords: Income tax; Education - Economic aspects; College graduates (search for similar items in EconPapers)
Date: 2007
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