From Completion to Attainment
To estimate the effect on the economy, the completion rates by cohort must be translated to overall population attainment rates. The improvement in completion rates is expected to be phased in over ten years, and to affect only people born in 1995 and later. The previous section estimated an annual improvement rate for four-year colleges of 2.4 percent, the annual attainment rate for each cohort is Bia x (1.024)t, where Bia is the baseline attainment rate for cohort i at age a, and t is the number of years since 2016. This assumes that reforms have their first impact in 2017.
For example, the baseline projection presupposes that 32.2 percent of the cohort born in 1995 will have a bachelor’s degree by age twenty-five. This group will reach age twenty-five in 2021,7 by which time the policy will have been implemented for five years, increasing attainment rates by 25 percent (1.0245 = 1.125). Therefore, the attainment rate for the 1995 cohort in 2021 under the scenario is 36.2 percent (32.2% x 1.125 = 36.2%).
Chart 7 shows the projected attainment rates for the cohort born in 2006, the first cohort for which the improvements are fully phased in for the entire adult life cycle. It is useful to note that the improvement in the decade from the 1995 cohort to the 2006 birth year is large, but of the same order of magnitude as the improvement from the 1960–1964 cohort to the 1970–1974 cohort.
A similar approach was taken regarding improvement in completion rates for associate’s degrees (see Chart 8). Here the growth in attainment over the life cycle for the 2006 cohort is bigger than it has been historically. However, the high noncompletion rates at many associate’s degree-granting institutions are consistent with the finding that there is much room for improvement.
The attainment rates for the baseline and scenario models are combined with Moody’s Analytics forecasts of age-specific population projections from 2017 to 2046 to create an estimate of the total attainment rate for the eighteen-to-sixty-nine-year-old population (see Chart 9). Total attainment is expected to rise from 31 percent in 2016 to 40 percent in 2046 under the baseline and 46 percent under the scenario. The rate of improvement in overall population attainment is similar to the improvement to date. This is combined with employment-to-population ratios for each age group to estimate the attainment rate for the working population, ages eighteen to sixty-nine.
A similar approach is taken to estimate the attainment rate for associate’s degrees. Here attainment is expected to rise from 10 percent in 2016 to 12 percent in the baseline and 15 percent in the scenario (see Chart 10). This is also consistent with past rates of overall improvement, albeit faster than in recent years.
Chart 7: Higher Completion Scenario
Sources: U.S. Bureau of Labor Statistics and Moody’s Analytics
Chart 8: Higher Completion Scenario
Sources: U.S. Bureau of Labor Statistics and Moody’s Analytics
Chart 9: Higher Overall Education
Sources: U.S. Bureau of Labor Statistics and Moody’s Analytics
Chart 10: Higher Overall Education
Sources: U.S. Bureau of Labor Statistics and Moody’s Analytics
ENDNOTES
7. Because attainment data are as of March of that year, it is assumed that age in a given year is equal to current year minus birth year plus one. For example, someone born in 1995 would be twenty-five years old by 2025 only if he or she was born before March 1995. Therefore, on average this cohort will turn twenty-five years old in 2026.