Understanding ROI on Postsecondary Education
Using Data to Support Strategic State Investments
The State Higher Education Executive Officers Association (SHEEO) recently shared findings from their annual survey, shedding light on the top ten policy priorities among the public executives in each state responsible for overseeing postsecondary education. Topping the list were three key areas: (1) supporting workforce and economic development, (2) ensuring adequate funding for public colleges and universities, and (3) addressing the growing concern among students and the public regarding the value of a college degree.
States need better data to help them address their priorities, especially priorities related to demonstrating value and deepening connections between postsecondary education and the workforce. State leaders can use these data and related research to inform state residents and decision makers about the economic benefits of different types of degrees and programs. The data and research can also help states direct postsecondary investments towards those credentials and programs that are well rewarded and in high demand in local and regional labor markets.
In this blog, we share three recommendations for how states can:
- demonstrate value and boost the economy by using postsecondary data and research effectively,
- strengthen connections between postsecondary education and the workforce by enhancing state data systems, and
- gain new perspectives and knowledge to inform policy and practice by giving data access to trusted partners.
Demonstrate value and boost the economy by using data and research effectively
In 2023, Ithaka S+R, with support from the Woodward Hines Education Foundation, published a report that examined the individual and state-level economic returns associated with different levels of educational attainment in Mississippi. By analyzing data from the Bureau of Labor Statistics and the Census, we found that Mississippi could potentially gain hundreds of millions of dollars in increased tax revenue and decreased social services spending by raising the state’s attainment rate to 60 percent.
More importantly, our research shows that investing in educational opportunities for Black and female Mississippians has the greatest fiscal return for the state and for those individuals. For example, compared to Black residents with only a high school diploma, Black residents with a Bachelor’s degree earn 1.5 times more over their lifetime and return to the state more than twice as much revenue in higher tax payments and decreased social services spending. These differential returns outpace those of white Mississippi residents, meaning that raising Black Mississippians’ postsecondary attainment pays additional dividends to the state.
In accordance with their stated priorities, state lawmakers can use research and data to identify the most effective ways to direct resources to high-poverty communities, initiatives that serve historically marginalized residents, and degree programs that translate to in-demand jobs with strong wages. These actions can also help to build trust amongst those communities and constituents that have historically been excluded from or underrepresented in postsecondary education.
Strengthen connections between postsecondary education and the workforce by enhancing state data systems
Research is only as good as the data available to conduct it. While states have made great progress in recent years to connect postsecondary education and workforce data, there are still gaps that limit our understanding of which public policies are most effective. Students are increasingly pursuing non-traditional pathways from education to career and desiring more specific information on the economic value of these pathways, which requires new data in state systems to identify high-potential trajectories.
Unlike Mississippi’s statewide longitudinal data system (SLDS), known as LifeTracks, which has detailed data on non-degree workforce programs, many states can enhance their data systems by including information on students enrolled in non-credit programs at community colleges. Without visibility into the scale and scope of these programs, states have little influence on or information about their economic value (e.g., which credentials are paying off for the institutions, their students, and the regional and state economies?), which limits any state-wide efforts to direct resources or define policies that can bolster enrollment in high-value, high-demand non-credit credentials.
Many states have linked their education data systems with their unemployment insurance data systems, which allows them to report on the wage outcomes of students. Yet, typically, these data only include the workers’ wages and industry, but do not include more detailed information like a worker’s occupation or the intensity of their work. States, therefore, are only able to report a worker is in the healthcare industry, but not their specific job—nurses’ aide, physician, administrator. Adding new data fields like job title or standard occupational code, primary location of the worker (remote, on-site), and hours worked would provide the detail needed to fully understand employment outcomes and return on investment.
While states are making efforts to collect more non-credit data and enhance occupational information in their data systems, there is more work to do. These enhancements can help state leaders make smarter investments in postsecondary education and workforce training and maximize the return on investment for states and students.
Gain new perspectives and knowledge to inform policy and practice by giving data access to trusted partners
States must also ensure access to their data systems for trusted partners, which is essential to expanding their own capacity and ensuring the best evidence-based policymaking. Unfortunately, in our study, we could not access Mississippi’s LifeTracks system. Mississippi’s SLDS, like many other states, has data on individuals who have or are enrolled in Mississippi’s early childhood, primary and secondary schools, and postsecondary institutions. LifeTracks also has data from the Mississippi Departments of Employment Security and Rehabilitation Services, which provides information on employment status, annual earnings, and rehabilitation services received. These data are highly protected and confidential, but under certain conditions, state officials and external researchers can use the data to track individual students through their education experiences and beyond.
Since we could not access LifeTracks, we used Census data compiled by researchers at IPUMS USA to make broad comparisons regarding earnings outcomes for Mississippians of different races and genders at different education levels. Census data provide a cross-section of individuals and their experiences and outcomes, which allows you to create estimates of the experiences and outcomes for groups of individuals at a specific point in time. For instance, we used the cross-sectional Census data to estimate and predict the lifetime returns (through age 64) for different degree levels for the set of individuals who lived in four regions of Mississippi and were around the age of 35 in 2020. We found that, in the rural Delta region, more so than in other regions, individuals with an associate’s degree earned significantly higher average earnings compared to those with only a high school diploma. This finding suggests that boosting attainment of associate’s degrees may have greater returns in the Delta region than in other parts of the state.
Statewide longitudinal data systems, however, provide a longitudinal view of individuals’ experiences and outcomes, which allows a more precise measurement (not just estimate) of individuals’ experiences and outcomes across time. Access to Mississippi’s SLDS would have allowed us to explore the pathways of specific groups of students across years and to more deeply understand how their experiences and personal characteristics influenced their postsecondary and labor market outcomes. It would also have allowed for an exploration of alternative pathways to traditional bachelor’s degrees, such as sub-associates or non-degree certificates, which are not captured in publicly-available data sources.
Many states have the internal capacity to analyze and act on research and data using their SLDS; yet all states could benefit from an external perspective and additional capacity by making their data systems more accessible to researchers (with proper security safeguards and privacy protections).
In order to address their policy priorities, state higher education leaders must strategically use research and data to direct their investments in postsecondary education and training programs. In some cases, this means conducting internal research on the returns to various postsecondary pathways; in other cases, this means making state longitudinal data readily available to external researchers who can bring new resources and expertise to bear on questions of postsecondary economic returns. In all cases, state data systems must have the necessary elements to answer the most important questions about how to help students succeed in postsecondary endeavors and thrive in the labor market. Taking these steps is essential to building public trust and demonstrating the value of a college degree.