Graduation Year

Fall 2013

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics-Accounting

Reader 1

Mathew Magilke

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© 2013 Jordon Stein

Abstract

In this thesis, I discuss the emergence of the “non-traditional” post -secondary student and what is necessary to both narrow the socioeconomic education gap and make higher education more efficient for the vast majority of Americans. l explain how the current conglomeration of laws, regulations and proposed regulations stifle innovation and inhibit the achievement of a high Education Return On Investment. I discuss changes that are on the horizon and borrow from the success of certain innovations. In the final section, I suggest and review potential frameworks for education innovation and funding that can make a difference. I propose a better measure of program-level success by using the following formula:

EDUCATION ROI =

(Increased Earnings + Increased Economic Productivity + lower healthcare, unemployment, and other related costs)

/

(Federal + State + Student Expenditures)

To arrive at this formula and evaluate current institutions, I look at the total costs to attend these schools, the cost per degree, and the cost per taxpayer. I look at earnings data for different periods after graduation as well as the levels of debt and interest payments students accumulate during this time. The results show that currently, for-profit institutions are much cheaper per degree to the student (long term) and taxpayer due to superior graduation rates, higher earnings data, and better job placement and therefore provide a higher Education ROI. These schools are also the most active in the education space in creating innovative new ideas to increase the “Return” while decreasing the “Investment” and at the same time increasing accessibility to a larger group of students. Using this measure to evaluate our schools may result in a more efficient appropriation of federal funds to the schools that are achieving a better Education ROI, an increase in the exponentially growing skilled labor market, and several other positive externalities positively correlated with education such as health, reduced crime, and a general increase in value to society.

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