Iowa will leave $479 million on the table in state revenues unless the state increases the number of adults with postsecondary credentials by 2025.
The new analysis shows to remain globally competitive, the United States will need to produce 24 million additional degrees and Iowa needs to produce 108,807 additional degrees by 2025 to achieve a 60 percent degree attainment rate among adults ages 25 to 64. At current attainment rates, the U.S. is on track to produce just 278,500 additional degrees by 2025 – a significant shortfall.
Today in Iowa, fewer residents are graduating from college with associate or bachelor’s degrees. And between now and 2025, Iowa is expected to continue producing fewer credentials, slipping further every year from meeting future business demand for postsecondary credentials. These declines translate into reduced average personal earnings and state revenues. Under the state’s current postsecondary patterns, annual personal per capita income in Iowa is projected to decrease by about $37 in 2025. Additional state revenues in income taxes, property taxes, sales taxes, and savings in spending on Medicaid and corrections will decline by about $14 million in 2025 due to reductions in the number of college degrees. These are the findings from a dynamic new tool released today by CLASP, the Center for Law and Social Policy, and the Center for Higher Education Management Systems (NCHEMS).
However, if Iowa achieves the 60 percent credential attainment goal by 2025, the state will see revenue exceed postsecondary costs by approximately $320 million in 2025. Iowa ranks 46th out of the 50 states in the increased percentage of degrees it needs to produce annually to meet the 60 percent goal – one of the smallest gaps in the nation. By meeting the 60 percent credential attainment goal, average personal earnings and state revenues would increase significantly. Annual per capita income in Iowa would increase by approximately $1,100 in 2025. State revenues would increase by about $465 million that same year.
The nation overall is also falling behind other leading countries in the number of adults with a postsecondary credential and the skills needed by employers. If the United States does not significantly increase the number of credentialed adults, the country stands to walk away from about $600 billion in additional national revenue in 2025. Currently, the United States ranks 15th among 34 Organisation for Economic Cooperation and Development (OECD) member countries with only 41 percent of the young adults having college degrees, behind leading OECD countries like Canada, Japan, France and the UK. The top three OECD countries – South Korea, Canada, and Japan - are on track to increase their college degree attainment to 60 percent by 2020.
“Leading OECD countries understand the direct correlation between educational attainment and national economic success. As policymakers and business leaders in the United States continue to look at ways to ensure our national economic prosperity, they need to push for investments to dramatically increase the number of postsecondary credentials,” said Vickie Choitz, Senior Policy Analyst, CLASP. “These increases can’t be put off for another five or 10 years if we want a strong economic future for America.”
The Return on Investment Dashboard allows stakeholders to calculate the short- and long-term effects of either maintaining the status quo or increasing investments in postsecondary education. For example, under the status quo, additional national revenues from the 278,500 additional credentials will be about $6 billion. On the other hand, additional national revenue from meeting the 24 million credential mark would top $600 billion in 2025.
“For some states, the 60 percent goal is out of reach; however, all states would see substantial revenue gains if they invest in increasing the number of adults who attain postsecondary credentials,” said Patrick Kelly, Senior Associate, NCHEMS. “This is a win-win for states, their local businesses, and their local economies.”
Federal and state funding for higher education, adult education and workforce development has declined over the past few decades and remains under threat with budget pressures. This tool shows that moves to cut state funding for postsecondary education and federal Pell Grants are short-sighted. By investing more in postsecondary education, not only will the country’s coffers reap rewards, but so too will personal income grow. Better educated workers earn higher wages and are more likely to be employed than less-educated ones. Under current postsecondary investment patterns, however, annual personal per capita income in the U.S. is projected to increase by just $14 in 2025. By meeting the 60 percent credential attainment goal, annual per capita income would increase significantly more to approximately $1,400.
