Why Governments Around The World Cannot Stop and Will Not Stop Financi

In September 2011, leading government, higher education and finance professionals met at a conference in Bellagio, Italy. The conference, hosted by The Chicago School of Professional Psychology, focused on enhancing access to higher education in developing countries. Dr. Orlando Taylor, one of the co-organizers of the consortium, noted that while higher education is becoming necessary for countries and individuals to compete in a global economy, the cost of access to high-quality education is also a challenging burden.

In the United States, the College Board recently published its report entitled “Education Pays 2010: The Benefits of Higher Education For Individuals and Society.” People who earn a bachelor’s degree earn almost twice as much as people without an undergraduate degree, and the unemployment rate for people with only high school diplomas was three times the rate for people who earned bachelor’s degrees.

Increased earnings benefit not only degree holders but also governments. Higher salaries mean higher tax revenues for local, regional and national governments. The median tax payments of people with a four-year degree were nearly 3.5 times higher than tax payments from those who had only graduated from high school. Also, far fewer people with undergraduate degrees depend on assistance programs, saving governments a tremendous amount of money. In addition, college-educated adults are more likely to receive health insurance benefits from their jobs and to have healthier lifestyles, saving governments billions in health care costs.

Interestingly, the United States ranks first in expenses on higher education but also first in college dropout rates, according to the Organization of Economic Cooperation and Development. In fact, only half of students who enroll in college in the United States manage to graduate with a bachelor’s degree. The expense of higher education tends to have an especially strong negative effect on students from lower-income households. The only way to significantly reduce the dropout rate in American universities, according to experts, is to lift the graduation rate among poor and middle-income students.

Sweden, Finland and The Netherlands ranked as the top countries for higher education affordability, while the United States, Japan and Canada were the most expensive places to go to college. Austria and Germany reduce students’ higher education costs by about one-third thanks to tax expenditures and family benefits. However, neither country has a high participation and attainment rate, and those who do attend college come from more affluent backgrounds.

Many Asian countries are also benefiting from improving higher education. China, Japan, Malaysia and Hong Kong have greatly invested in the quality of their higher education institutions. By contrast, countries with massive budget deficits, like the United States and the United Kingdom, may have to significantly cut their investment in higher education. Such spending cuts, according to the OECD, could make for a major “redistribution of brains.” India’s higher education system is the third largest in the world, but many high tech industries complain that graduates are not qualified to perform available jobs. A high proportion of Indian students leave the country to pursue degrees overseas; many never return.

Governments will always spend on higher education. However, governments that devote less to higher education as a way of combating budget problems may pay a high societal price. Countries like the United States would benefit more from getting a better return on investment, particularly by addressing their dismal college dropout rate. Getting students into college is not enough. They have to finish school to reap the benefits both for themselves and for society.