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 Assistant Secretary Eberly Discusses Economics of Higher Education at MIT

By: Anthony Reyes

During his State of the Union address earlier this week, President Obama pointed out how "it’s a simple fact the more education you’ve got, the more likely you are to have a good job and work your way into the middle class." Assistant Secretary for Economic Policy and Chief Economist Dr. Janice Eberly echoed this same notion a few days before by traveling to the Massachusetts Institute of Technology (MIT) campus in Boston to participate in a forum discussing the "Economics of Higher Education." Sharing findings from a report released late last year by Treasury in conjunction with the Department of Education, Assistant Secretary Eberly spoke about the real economic benefits of pursuing a higher education and its role in addressing economic mobility and inequality.                                                                             

The event, sponsored by MIT’s Department of Economics and School of Humanities, Arts, and Social Sciences, featured a panel of scholars and policymakers in the field of higher education. Assistant Secretary Eberly gave a presentation that covered several important observations on the strong positive returns of higher education for individuals and society as well as the federal government's growing support for it.

educationpays.jpgOne chart that Assistant Secretary Eberly presented showed how people with more education typically earn more and have a lower likelihood of being unemployed. Assistant Secretary Eberly stated how "in 2011, the typical worker with just a bachelor’s degree earned about $1,000 a week, roughly two-thirds more than those with only a high school diploma.  The unemployment rate for workers with a bachelor’s degree was 4.9 percent, about half of the rate for people with only a high school diploma."

mobility.jpgAssistant Secretary Eberly pointed out that education is a key to economic mobility: “This figure shows that without a college degree, children born in the lowest income quintile have a 45 percent change of remaining in the bottom quintile as adults and a nearly 70 percent chance of ending up in the bottom two quintiles.  With a college degree, children born in the bottom quintile have less than a 20 percent chance of staying in the bottom quintile of the income distribution and about an equal chance of ending up in any of the higher income quintiles.  Likewise, among those born in the top quintile, education plays a strong role in maintaining higher levels of income across generations.”

Discussing how the federal government has become increasingly involved by providing more need-based financial aid for higher education such as Pell grants and Stafford loans, Assistant Secretary Eberly also noted how the substantial change in the source and type of education finance has been a result of eroding state and local funding over the years. Eberly said that while education policy has often been implemented at the local and state level, the federal role has been growing over time – both for budget reasons and also because of increasing recognition of the national interest in human capital issues.

Assistant Secretary Eberly concluded her presentation at MIT by emphasizing how education is “one of the most important issues of our generation.” There are proven personal economic benefits to attending college and the broader role of a well-educated workforce is also vital to our nation’s future economic growth.

To read the full report released by Treasury last year please click here and to learn more about the Obama Administration's latest education initiatives please visit here

Anthony Reyes is the New Media Specialist at the U.S. Department of the Treasury. 

Posted in:  Economic Policy
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