Monday, June 27

A Changing Global Economy Requires Investment and Support of Higher Education

By: Anton Kozyrev

It would be a gross understatement to say that education has a big impact on individuals’ lives. It is often the defining factor that shapes the trajectory of one’s life, all thanks to the immense financial and economic influences it has. The United States consistently spends more on elementary and secondary education per student than any other nation in the world — and the U.S. has among the highest secondary school graduation rates in the world. This has undoubtedly been a major factor in the U.S.’ economic growth and development in the past decades.

However, as the global economy shifts in the coming years, requiring more extensive forays into increasingly complex topics and conjectures, the workforce of the future will need to expand upon its education to keep up. There was a time when one could theoretically end his or her high school education before graduating and enter the workforce immediately — and still have ample employment opportunities. A full secondary school education was a great boon to anybody entering the workforce, for it enhanced and developed the contributing potential of the future employee to their employer. However, as more and more high school graduates entered the workforce and industries came to demand more extensive knowledge, a new “distinguishing factor” replaced that of a secondary education.

With the advent of widespread post-secondary education, the U.S. workforce has seen its skills and competitiveness grow. This has, in turn, enabled industries and the economy to flourish, opening new opportunities and pathways that stimulate even more educational attainment. Now, the United States is at a point at which, in a hyper-competitive job market, a high school education is no longer the minimum requirement. A college education has now become the standard for any individual who desires to be a compelling hire. And there is nothing principally wrong with this — it’s an indicator of a growing and expanding economy that is becoming, as a whole, increasingly competitive with the rest of the world.

However, current U.S. levels of college education attainment are not enough. After all, it’s undeniable that the current system tends to, in many cases, favor students with the financial wherewithal to pursue higher education. This keeps the earning potential and academic development that a higher education can provide largely confined within a select group. This will not be enough to keep the United States competitive globally. To counter this, the U.S. government should further expand investment into its higher education system — including various institutions, from state colleges to private research universities such as Vanderbilt.

This investment must hit several key points.

First, there must be an allocation of direct financial support for institutions that are struggling. This encompasses a variety of schools, from underfunded community colleges to geographically-remote state colleges. According to the Center for American Progress, community colleges in the U.S. are critically underfunded and face a $78 billion funding shortfall, even though they tend to serve a greater number of low-income students and students of color. Furthermore, the COVID-19 pandemic has exacerbated issues that have already plagued the public college system for over a decade. According to NBC News, because of the “added pressures of the coronavirus pandemic, the fabric of American higher education has become even more strained: The prospect of lower revenues has already forced some schools to slash budgets and could lead to waves of closings.” These key institutions cannot be allowed to collapse, as they are vital in their roles as appropriate alternatives to a costly private college education. Financial support from the U.S. Department of Education will maintain viable pathways to higher education.

In addition, the FSA (Federal Student Aid) program administered by the U.S. Department of Education must receive increased funding from the federal government to subsidize the cost of a college education for many students. Often, when today’s students fill out the FAFSA, many middle-class families are faced with an extremely high EFC (Expected Family Contribution) that the family simply cannot afford — which then pushes these students toward loans to pay for education. This has lasting implications for the federal government with respect to earning potential, for if a student is hamstrung by massive student loans, their career may progress at a slower pace and lead to less taxable revenue. If, however, the cost of lowering families’ Expected Family Contributions proves to be too much, there is another route the federal government can take. By establishing more merit-based and competitive scholarships, the U.S. can ensure that students with world-changing potential are attending college and gaining access to all of the tools and resources they need to succeed.

Of course, some may argue that such an investment in higher education is too much, or that it seems illogical to do so when the nation hasn’t yet perfected elementary or secondary education. Here, it’s important to consider the fact that most issues that arise with the earlier stages of schooling in the U.S. are localized issues that can, and should, be addressed on the state level. Different states have different policies enacted at their respective Departments of Education. Yes, the federal government should do its best to resolve this issue, but it is more of a state-level funding problem.

Education is the key to maintaining a nation’s short-term economic growth. After all, the government is largely funded through the process of taxation, whether it be of individuals or industries. According to the Bureau of Labor Statistics, higher educational attainment is closely related to higher income and lower unemployment rates. After all, individuals with a Master’s degree have a median weekly income of $1,401, an almost double the median weekly income of $712 for individuals with only a high school diploma. These higher incomes and lower unemployment rates enable the government to receive more in taxes and reduce the strain on government welfare and aid programs and expenditures.

Education is also the key to expanding and growing a nation’s long-term economic and scientific progress. The United States and its Cold War adversary, the Soviet Union, both saw incredible scientific progress and growth — and one of the key roots of this competition was a drive to provide stronger education for one’s youth. According to the History Channel, the U.S. experienced an “anti-homework” movement in the early 20th century that persisted up through the end of WWII. However, when the Soviet Union leapt to the forefront of scientific innovation with the launch of the Sputnik satellite in 1957, many U.S. officials were panicked — after all, “How could it be that the Soviets had gotten there faster?” The Soviet Union had just been ravaged by WWII. The key to this competition was education — and the U.S. came to understand that, eventually passing the National Defense Education Act the following year, which provided a $1 billion investment into education, particularly that of science and mathematics. 

It is apparent now that substantial investment in education is beneficial from both an economic and national security standpoint, and this may well be an intriguing path for the United States to consider as it pivots to a changing world.