Give a dollar to California’s public colleges and universities and receive $4.50 back. Those are pretty good odds, and they’re not from one of those overseas scam emails humbly requesting your help in transferring funds. This more-than-400-percent yield is the net return on the state’s investment in higher education, according to California’s Economic Payoff, one of two reports released yesterday that make the case for a stronger state investment in higher education.

Dr. Henry Brady, Dean, Goldman School of Public Policy at UC Berkeley. Photo by Stephanie Romero-Crockett. (Click to enlarge)

Multiply that by the hundreds of thousands of students enrolled in the University of California and California State University and the state stands to make about $10 billion from today’s college graduates when they turn 50 years old. That’s after the students have paid back the $4.5 billion the state spent to help them earn their degrees, according to the study published by the Campaign for College Opportunity.

Yes, it’s a long time to wait, and that’s part of the reason California keeps cutting higher education funding, said Henry Brady, Dean of UC Berkeley’s Goldman School of Public Policy and a co-author of the report.  “This tells you why legislators can be myopic; because not spending money looks like a good idea in the short run, but in the long run, it’s a terrible idea,” Brady told a roomful of educators, advocates and business leaders gathered yesterday at the Silicon Valley Education Foundation in San Jose.  “We are creating a time bomb that will create bigger budgetary problems in California.”

The benefits of a bachelor’s degree are far-reaching. For graduates, it amounts to a $1.34 million increase in lifetime earnings. That equates to more spending power and more tax revenue going to the state coffers, and less money spent on the bad things that disproportionately affect people with less education, including living in poverty, being unemployed, requiring public assistance, and ending up in prison. On average, someone without a high school diploma will spend more than ten years living in poverty, compared to an average of two years for a college graduate.

The economic benefits of graduating from college have also been increasing in recent years, across all

A college degree increases lifetime earnings four fold over those who never finished high school. Source: Campaign for College Opportunity and UC Berkeley. (Click to enlarge).

demographics. “A college degree has become more valuable for every ethnic group,” said Brady. However, it’s still far from equal. The average lifetime earnings of a black college graduate in California increased from about $820,000 in 1980 to $1.23 million in 2010. At the same time, white graduates increased their lifetime earnings from $1.04 million to nearly $2 million.

In Silicon Valley, Latinos make up 25 percent of the population, but only three percent of the high tech workforce. Former San Jose Mayor Ron Gonzales, now president and CEO of the Hispanic Foundation of Silicon Valley, wants to boost that to at least 30 percent.  That will require a stronger focus on education, especially in science, technology, engineering and math, known as STEM subjects.  But the Foundation’s first-ever Latino Report Card on the quality of life in Silicon Valley found that only a third of Hispanic children are reading at grade level in third grade, a quarter drop out of school, and only 25 percent complete high school with the required courses for admission to UC and Cal State.

A college degree increases lifetime income for all ethnic groups, but not at the same level. Source: Campaign for College Opportunity and UC Berkeley. (Click to enlarge).

“This is the kind of report card that I would not want to take home to my parents,” said Gonzales.

Slipping enrollment

What’s happening in Silicon Valley is particularly critical because by 2035, Latinos will be the majority population in the area and California’s economic future depends on increasing the number of students earning college degrees.  But that’s not happening for Latinos or any ethnic or racial group.

Hans Johnson with the Public Policy Institute of California (PPIC) warned of a “workforce skills gap” unless more students are prepared to enroll in and succeed at UC, CSU or community college.  “Our economy will continue to demand more higher education, yet our population isn’t moving in that direction,” said Johnson, author of Defunding Higher Education:  What Are the Effects on College Enrollment?

The study found that the state disinvestment in higher education is having an immediate toll on college-going rates.  “Both UC and CSU have adopted policies and practices intentionally designed to reduce enrollment,” wrote Johnson.

The most prestigious campuses have become more selective by reducing enrollment targets and raising qualifications. CSU has designated 16 of its 23 campuses

UC and CSU enrollment dropping even among top high school grads. Source: Public Policy Institute of California. (Click to enlarge).

as impacted in order to raise the standards for admission.  The University also announced that in the spring of 2013 it will only admit community college students who meet specific transfer requirements.  Other findings in the report include:

  • Enrollment rates at UC and CSU fell by one-fifth over the past five years, from 22 percent of all high school graduates to below 18 percent,
  • Among the state’s most highly prepared high school graduates, those with the required A-G courses, enrollment in UC and Cal State declined from 67 percent to 55 percent since 2006,


In an earlier study, PPIC projected that by 2025, a quarter of California adults will have a bachelor’s degree, but 41 percent of jobs will require it, a shortfall of one million college graduates.

“The high cost is driving away the students that really need to reach, especially poor students and students of color,” said Manny Barbara, Vice President of the

Silicon Valley Education Foundation.  Barbara recalled that when he was a student at San Jose State University many years ago, he earned $5 an hour as a waiter, and after one 30-hour workweek he was able to pay his tuition.  Today, he said, it would take at least ten weeks for a student to earn enough money for tuition.  “My fear is we’re becoming a two-tier society if we’re not there already.”

Barbara said he hopes these reports will show legislators and voters the value of higher education.  If that doesn’t work, UC Berkeley’s Henry Brady has another idea, what he calls his “Swiftian proposal.”  In the spirit of A Modest Proposal, the author’s satirical essay about selling children from impoverished families as food to ease the famine for the wealthy class, Brady suggested turning “all college campuses into prisons, thus getting $50,000 per student.”


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