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ATD Blog

Can Government Funding for Higher Ed Help Bridge the Skills Gap?

Thursday, July 13, 2017
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Higher Educ
Efforts are underway to increase federal and state funding to repair the country's critical aging infrastructure to improve GDP growth.

If a similar bipartisan effort was made to improve student retention in higher education institutions and degree completion, it too would contribute to sustainable GDP growth. That’s because college graduates are more likely to be employed, have higher incomes, buy a home, and save and invest—all of which can contribute to sustainable GDP growth.

The National Center for Educational Statistics projected that the 2017 graduating class at colleges and universities would consist of 1.9 million bachelor's degrees and 798,000 master's degrees. The difference in earnings, over a career for every million college graduates, will generate more than $1 trillion of economic impact for the country.

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Perhaps this new role for federal and state governments in higher education could start with the U.S. Congress creating a $50 billion block grant for states. This proposal would immediately provide more support for college degree attainment. Data provided by the U.S. Census Bureau shows that, during a college degree holder's career, those with a bachelor's degree will earn a million dollars more, and holders of master's degrees can expect to earn almost $1.5 million more.

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With $50 billion of new federal support, 500 public colleges and universities could receive grants of $100 million restricted to their endowments. With an annual drawdown of four percent, it would support about 2,300 students at each institution. This could help about 1.1 million students across the country. Each student could receive as much as 20 percent of their tuition, based on statistics provided by the College Board of the average tuition at a public four-year college.

While the growth of the endowments will fluctuate in value, as perpetual pools of assets, the federal government's original investment will provide future economic growth without additional funding.

What do you think of this proposal? Share your thoughts in the Comments. In the meantime, check out the ATD whitepaper Bridging the Skills Gap: Workforce Development Is Everyone’s Business.

About the Author

Mark Spradley is managing director of Mazao Capital, a private equity firm. His responsibilities include ensuring that portfolio companies achieve annual cost savings, revenue generation, and cash acceleration goals. Before joining Mazao Capital, Spradley was a vice president with UBS. At UBS, he advised corporations, non-profits and ultra-high net worth individuals on asset allocation and securities selection. He previously served as a financial advisor with Legg Mason. Prior to working in financial services, Spradley was a senior vice president with a global strategic communication and public affairs firm.  Spradley was awarded a M.S.Ed. from the University of Pennsylvania  He earned a MBA from the University of London and a MBA from the TRIUM Program, which was jointly issued by NYU Stern School of Business, London School of Economics and HEC, Paris. Spradley received  a Bachelor of Science degree from Howard University. Spradley's articles, opinion editorials, and letters to the editors have appeared in the Washington Post, Financial Times, Wall Street Journal, Miami Herald, Los Angels Times, Black Enterprise, Christian Science Monitor, Washington Times, Baltimore Sun, Chicago Times, and the Chronicle of Higher Education. 

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