Introduction
The economic performance of the United States has historically been tied to the education level of its population. Over the last hundred years, the U.S. population has steadily become more educated, with the average educational attainment increasing by about one year per decade. Economists estimate that this increase in human capital accounts for about 20 percent of overall growth in labor productivity over this time period.2
Yet it cannot be assumed that the process of expanding education that has prevailed for the last hundred years or so can continue indefinitely. High school attendance has been nearly universal for decades, and the high school dropout rate has fallen from 27.2 percent in 1960 to only 6.5 percent today, leaving less room for improvement than in the past. This puts greater importance on increasing college attainment. The good news is that the share of the population with a bachelor’s degree is consistently increasing. The trend is also clear when focusing only on twenty-five-year-olds to abstract from demographic changes (see Chart 1).
Chart 1: Educational Attainment Grows
Sources: U.S. Bureau of Labor Statistics and Moody’s Analytics
However, not all past trends can be expected to continue. Although some commentators have declared that going to college should become as universal as K-12 education,3 not every occupation requires a college degree, and not every person has the ability to get one or the interest to do so.
This raises important questions about the future of college attainment and the economy. If educational attainment is slowing, what will happen to the economy in coming decades? Conversely, what will happen to the economy if policy-makers are able to spur continued improvement in attainment rates?
This report will examine one particularly useful scenario: the effects of increasing college completion rates. The focus on completion is appealing, since it does not require encouraging people who otherwise would not choose to go to college. Instead, it concentrates on those who chose to go but did not finish. While there are necessarily limitations on increasing college enrollment, the room for improvement from current margins is clear: Only 61 percent of first-time students at four-year universities finish their degrees within 200 percent of the usual time to completion. For students at two-year programs, the completion rate is an even lower 21 percent. With only one-third of twenty-five-year-olds today holding a bachelor’s degree, the question of whether “everyone should go to college” is irrelevant for the time being.
ENDNOTES
2. Claudia Goldin and Lawrence F. Katz, The Race Between Education and Technology (Cambridge, Mass.: Harvard University Press, 2009).
3. David Leonhardt, “Is College Worth It? Clearly, New Data Say,” The New York Times, May 27, 2014.