A Cost-Benefit Analysis of Higher Education in Tennessee


  • F. Steb Hipple


In 1993, Professor Barry Bluestone published his innovative cost-benefit study on the economic impact of the University of Massachusetts at Boston.  His benefit calculations were based on the additional income earned and taxes paid by college graduates.  In 1998 the Tennessee Board of Regents conducted a similar study on higher education in Tennessee.  The present paper uses the Bluestone methodology to estimate the benefits of higher education, and with the main focus on the financial return to the state government.  The study finds that every dollar invested by Tennessee in higher education returns nearly two dollars in additional tax revenue.  At a time of structural deficits in the state budget, it is important to understand that higher education can best be considered an investment of scarce state resources rather than a spending category with no discernable return to state coffers.


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