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In this report, we present the results of a thought experiment in which we estimated the potential costs and benefits to society of achieving equality in educational attainment and related workforce outcomes by race/ethnicity, class, and gender. We conducted this thought experiment to clarify the role that education can play in reducing inequality. While education has significant value that cannot be measured in monetary terms, we focused in our analysis on monetary outcomes such as earnings, tax revenue, and effects on GDP, along with secondary effects on incarceration costs, public health expenditures, and other public programs, using a stepwise analysis to simulate what would happen if various income, racial or ethnic, and gender equity gaps were closed. We first measured the effect of closing attainment gaps by earnings and race within the population so that low-income adults (those without earnings and those in the bottom 40 percent of earnings) matched the educational attainment of adults in the top 60 percent of earnings, and so that adults from underrepresented racial and ethnic groups matched the educational attainment of White adults. We then examined the marginal gains that would be possible if, in addition to closing attainment gaps, we were able to eliminate federal student loan debt for new completers of college credentials. After exploring the gains that could be possible based on increases in attainment and elimination of student debt for low-income additional credential holders, we conducted a stepwise analysis to estimate the earnings gaps that would remain between White men and other race/gender groups at various equity thresholds. For example, we estimated the wealth gaps that would remain after accounting for new potential cumulative savings (accrued as a result of closing earnings gaps), with the constraint that only 55 percent of wealth on average currently comes from self-generated earnings. By focusing on savings as a first step to accumulating wealth, we were able to analyze wealth at the individual level and build a proxy link between education, earnings, and overall wealth accumulation. We found that simply equalizing attainment by earnings and race/ethnicity would result in 30.5 million more people earning a college credential (a certificate or an associate's degree or above), bringing the total share of Americans with a college credential to 63 percent. We found that reaching this target would have an initial cumulative cost of at least $3.97 trillion, but would create annual benefits to society of more than $956 billion in increased tax revenue, increased GDP, reduced public health expenses, reduced criminal justice expenditures, and reduced reliance on public support programs. The personal benefits of these gains translate to $1.03 trillion in additional annual earnings, corresponding with a $3.17 trillion increase in potential cumulative savings over the course of workers' remaining careers. If we were able to equalize attainment without creating additional debt for new low-income completers, the increase in potential cumulative savings would rise even higher, to $3.76 trillion. It's tempting but inaccurate to interpret these numbers as suggesting that the investment we describe here would pay off in slightly more than four years. Our thought experiment assumes that all costs and benefits are realized immediately, but the harsh reality is that neither costs nor benefits would occur instantaneously. In fact, constraints related to capacity, readiness, and efficiency suggest that even in the best-case scenario--in which substantial systemic reforms allowed more low-income students and students from underrepresented racial/ethnic backgrounds to enroll and succeed in the postsecondary education system--it would take at least 34 years just to fill the gaps at various levels of educational attainment. In this scenario, annual benefits would begin to exceed annual costs after more than nine years and would continue to grow until the annual public benefit reached the maximum of $956 billion annually. Even after equalizing attainment, gaps in earnings and wealth could still take generations to close due to unrelenting inequalities in the workforce, the role of intergenerational transmission in maintaining wealth gaps, and deep structural inequalities maintained over hundreds of years though discriminatory policy and practice. Substantial sustained investment will be required for postsecondary education to realize its full potential to contribute to the public good. [For the executive summary, see ED612642.]

Many Americans would agree that all people should have equal educational opportunity and equal pay for equal work. And yet, inequality in postsecondary education access, college completion, and post-college outcomes such as wages stubbornly persists, along with the impression that achieving equal outcomes would be too expensive and would take too much time to accomplish. A thought experiment that the authors conducted in partnership with the Postsecondary Value Commission demonstrates that equality in postsecondary education would have considerable value to society. While equalizing educational attainment would be costly and time-intensive, balancing the costs with the potential societal benefits shows that an investment in postsecondary equality is money well spent. The top-line finding of the analysis is that equalizing postsecondary educational attainment by economic status and race/ethnicity would require an initial public investment of $3.97 trillion. The fiscal case for the societal value of economic and racial/ethnic justice in postsecondary education is even stronger today than it was before COVID-19 devastated American life. As higher education is forced to rethink its business model, it has the opportunity to more fully realize the potential of educational equity and recommit to enhancing the public good. Racial and economic justice need to be central goals, not secondary concerns or politically correct conceits unsupported by action, as postsecondary institutions reinvent themselves for the current era. [For the full report, see ED612641.]

In partnership with the Postsecondary Value Commission, we conducted a thought experiment on the costs of inequality in the US education system. Our simulation found that the US economy misses out on $956 billion dollars per year, along with numerous nonmonetary benefits, as a result of postsecondary attainment gaps by economic status and race/ethnicity. "The Cost of Economic and Racial Injustice in Postsecondary Education" finds that closing these gaps would require an initial public investment of at least $3.97 trillion, but the benefits would outweigh the costs over time. Equalizing educational attainment without increasing student debt for low-income adults could also boost GDP by a total of $764 billion annually. [During the writing of this report, Kathryn Peltier Campbell, Ban Cheah, Megan L. Fasules, Artem Gulish, Michael C. Quinn, Jenna R. Sablan, Nicole Smith, and Jeff Strohl received funding from the Institute for Higher Education Policy for work done on behalf of the Bill & Melinda Gates Foundation.]

This is the executive summary for the report, "The Dollars and Sense of Free College." Policymakers have debated the specifics of free-college programs--including whether free-college eligibility should extend to students at four-year public colleges as well as community colleges, and whether it should be universal or targeted to low-income and middle-income students. Free-college proposals generally reflect support for some form of publicly funded program that makes college attendance affordable for a majority of students. Joe Biden endorsed a free-college plan that was originally part of the party's platform in the previous election. This plan would make public community colleges tuition-free for all students. It also would make four-year public colleges and universities tuition-free for students with family incomes under $125,000, which would mean that approximately 80 percent of in-state undergraduate students at public four-year colleges and universities would not have to pay tuition. The federal government and state governments would share the costs of this program, with the federal government contributing $2 for every $1 contributed by a state. While the Biden plan has immediate relevance to the 2020 election, there are other ways to design free-college plans. This report discusses a variety of free-college models and assesses their relative costs and benefits. [For the full report, see ED608985.]

Free college has been gaining traction as a public policy option in recent years and has been adopted in some form by at least 15 states. Enthusiasm for the idea has gained momentum with the growing realization that a healthy economy requires a well-educated workforce and that workers benefit immensely from education beyond high school. Indeed, job market data show that 80 percent of jobs leading to middle-class wages call for at least some postsecondary education. Of course, free college is not really free for the taxpayers who will wind up paying for it. Supporters of free college argue that investment in the education system is a public good that yields both economic and noneconomic benefits far beyond its costs. In a diverse democratic society, higher education not only provides a path for economic self-sufficiency, it also contributes to positive outcomes such as improved health, reduced crime, and a greater sense of well-being. All these factors might reduce costs to society in the long run. Finally, higher education provides civic value by preparing an educated citizenry to participate in the electoral process. Any assessment of free-college plans needs to consider both costs and benefits. The analysis of a free-college plan endorsed by Joe Biden finds that it would have high costs but would also generate substantial benefits. Biden's plan would allow all students at community colleges and students with family incomes under $125,000 at public four-year universities to attend college without paying tuition. Like other first-dollar plans, Biden's program would allow students to use their existing financial aid toward other attendance costs, such as room and board. Biden's proposal for tuition-free college would cost $49.6 billion in its first year, with $33.1 billion in federal spending and $16.5 billion in state spending. These costs are $8.6 billion less than the costs associated with a first-dollar plan that would cover all students regardless of their family income. This report also examines the class and racial equity implications of first-dollar programs with universal eligibility, the Biden plan, and last-dollar programs with universal eligibility and discusses a variety of free-college models and assesses their relative costs and benefits. [For the executive summary, see ED608988.]