In the midst of the bloodshed of the Civil War, President Abraham Lincoln made two large investments in the country’s future. With southern senators no longer able to block key pieces of domestic legislation, in 1862 Congress passed the Pacific Railroad Act — establishing the northern route that would finally see its completion at Promontory Point, Utah — and also the Morrill Land Grant College Act.
The Morrill Land Grant College Act gave states parcels of federal land that the states could then sell to endow new universities that would focus on agriculture and engineering. This expansion of higher education ensured that the citizens of each state would have a university to gain an education, increase their employment opportunities and access applied research to generate economic growth. Communities such as Ames, Stillwater, Logan and Knoxville would soon have libraries that would rival those of ancient Alexandria and Rome.
Public higher education would expand again when veterans from World War II returned home armed with the newly passed GI Bill. This boost in financial aid for much of the middle class increased enrollments and made a university education accessible to more than the gentry class. The GI Bill was incredibly timely given the dramatic shift in the economy from a manufacturing base to a skills and ideas powered economy.
Higher education is one of the crown jewels of American institutions. It’s also one of our greatest exports as students from across the globe come here to study, more than a million in school year 2023-24.
However, like all institutions, higher education is not perfect. Recent polling shows that trust in higher education has fallen dramatically, but it’s important to remember three important facts about a college education.
First, college graduates do dramatically better in the labor market. Economists estimate that bachelor’s degree holders earned 88% more (nearly a doubling) in 2021 than those with a two-year degree or only a high school diploma, and this gap is set to widen. Some worry that too many students attend college, and student debt is a real problem, but researchers show that even a modest increase in the share of college graduates would dramatically decrease the share of low-income families. Students who barely make the admissions cutoff to attend a four-year university earn higher wages than those who barely miss it, signifying we do not have enough college graduates in the labor market.
Public institutions are especially effective at boosting income mobility. Harvard economist Raj Chetty used generationally linked IRS tax forms to map which universities take in the highest income students and place them in high income careers. Elite private schools (including selective religious institutions) tend to select students from high-income families such that an incoming class contains the top 1% of wage earners than the entire bottom 60% of the wage distribution.
However, public regional universities buck this trend. They enroll students mainly from the working and lower classes and place them in even higher paying jobs than their parents. Universities such as City University of New York, the California State University system and Georgia State University are economic mobility generators but get much less media attention than their Ivy League peers.
Second, public higher education not only serves those who attend their campuses. College education results in stronger families, better health and more pro-social behavior. College graduates also are more likely to vote and be engaged civically.
Finally, research from public higher education creates jobs and economic activity of the future. Medical schools are searching for a cure for cancer. Humanities document and preserve the arts and literature. STEM and agriculture departments create technologies to improve our lifestyles and feed our country. Even being located near a land-grant college creates spillovers that improve worker productivity and raise tax revenues. The Kem C. Gardner Policy Institute found that, in Utah, for example, one dollar of higher education investment boosts tax revenues by three dollars.
Public higher education has a covenant relationship with the taxpayers of the state. These colleges are responsible to the state’s elected officials and should be reexamined and reformed from time to time. However, divestment can increase student debt and lower wages, making it harder to afford a house or car. Policymakers considering budget reallocation should ensure before they remodel the system that they are opening a room to new perspectives rather than taking out a load-bearing wall. Using a sledgehammer instead of scalpel could kill the golden goose that pushes our economy and standard of living forward to a brighter future.