Monday, May 10, 2021

The Economic Impact of Higher Education


The Economic Impact of Higher Education


Higher education remains one of the leading economic drivers around the world through scientific research, technology development, engineering, and the cultivation of innovation across all categories of human endeavor.


Though profound, the economic benefit of innovation from the academy is often indirect, because, in addition to the creation of new knowledge on our campuses, we prepare the talent that makes many of these advances happen in businesses and organizations around the world.


The financial advantages our graduates experience also redound to the strength of regional and national economies. The value our institutions provide as engines of opportunities for students from all economic strata is a legitimate public good.


In our conversations about the roles our institutions play in micro and macro economies, we often underestimate the direct impacts colleges and universities have on their local and regional economies.


Local Impact


Susquehanna University is the largest private employer in Snyder County. In addition to generating an income and property tax base through those employees, the University provides more than $1 million in direct economic impact on the community through payroll taxes, water and sewer fees, property taxes, and approximately $180,000 in voluntary contributions to local governments and fire and EMT services.


Our students, their families, and thousands of visitors each year provide significant business to local restaurants, hotels, and stores. Over the past decade, Susquehanna has waived more than $4.3 million of tuition for local high-school dual-enrollment students.


Independent Colleges and Universities in Pennsylvania


Private higher education has a $24 billion economic impact in Pennsylvania each year. That figure nearly doubles when affiliated hospitals are included.


Independent colleges and universities in Pennsylvania support over 195,000 jobs across the Commonwealth generating over $1.1 billion in state and local taxes. A recent study[1] prepared by Parker Philips estimates that these institutions generate $3.4 billion in additional spending in the communities where they thrive. The same study reports that between students and employees these institutions provided over 5 million hours of volunteer service in 67 counties in 2018 alone.


The educational impact of independent higher education in Pennsylvania is especially impressive. Half of all four-year college degree-seeking students in Pennsylvania attend private colleges and universities. That includes 53% of all minority students seeking bachelor or advanced degrees, 49% of all working-age “adult” students, 50% of all bachelor degree-seeking STEM students, and 44% of all low-income (Pell-eligible) students seeking bachelor degrees.


On average, students at Pennsylvania’s private colleges graduate with less debt than those at the state’s public institutions. Most importantly, the Commonwealth’s independent institutions have significantly higher percentages of students who complete and complete on time than their public counterparts[2]:


                        Sector                         4-year grad rate         6-year grad rate

                        Independent              62%                             74%

                        State-Related             51%                              71%

                        PASSHE*                    40%                            58%


                        *PA State System of Higher Education NAICU schools


Independent Colleges and Universities in the United States


NAICU, the National Association of Independent Colleges and Universities, recently released a study of the economic impact of private nonprofit higher education nationwide[3].


This study estimates that these institutions have a $591.5 billion national economic impact each year. This includes generating $77.6 billion in local, state, and federal tax revenue.


1.1 million people are employed directly in non-profit higher education, and a total of 3.4 million jobs are collectively supported and sustained by these institutions. They also generate over $2.8 billion in charitable giving and volunteerism in their communities.


38% of Pell recipients attend four-year, private, nonprofit colleges even though those institutions enroll just 21% of degree-seeking students.


Once again, private institutions significantly outperform their public counterparts in on-time graduation. 70% bachelor’s degree recipients at public colleges completed in four years, compared to 84% at independent colleges.


74% of financial aid awarded to full-time students at independent colleges comes directly from the institution, which is more than double the figure for publics.


Over the past 14 years, although published tuition and fees have risen significantly, the average out-of-pocket tuition and fees have barely changed. In 2007-2008, the average out-of-pocket tuition and fees at private institutions was $15,830. In 2020-2021, the figure was $15,990. If these figures were adjusted for inflation, that represents a reduction of $3,485.


These collective data underscore that America’s independent, nonprofit colleges and universities not only provide a transformational education to over 5 million students each year, they are also a source of economic vitality of the communities they call home and of the nation itself.




[1] The Economic Impact of AICUP Schools: Independent, Nonprofit Colleges and Universities in Pennsylvania. August 2019.

[2] Making the Case for Independent, Nonprofit Higher Education 2020: An Overview of the Impact that AICUP Schools Have on the Commonwealth of Pennsylvania.

[3] Private, Nonprofit Higher Education: Shaping Lives and Anchoring Communities. April 2021.


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