The recent release of Complete Tennessee’s State of Higher Education in Tennessee report made me think about the goal of true education. My thoughts are shaped by my educational background in higher and adult education and the quote by Martin Luther King Jr. (said while he was a student at my alma mater, Morehouse College): “The function of education, therefore, is to teach one to think intensively and to think critically. … Intelligence plus character — that is the goal of true education.”
These two things drive me to look at the returns on education for individuals in Tennessee.
The St. Louis Fed’s Center for Household Financial Stability recently held a research conference focused on addressing the question: “Is college still worth it?” The research findings show that the wealth premium (or additional wealth earned by those with degrees) has declined for recent generations. However, the financial benefits of having a college degree still outweigh not having a college degree.
Even outside of the research, we individuals still widely hold that a college degree is recognized as a path to higher income and greater financial well-being. We still see that a little over 50 percent say the lifetime benefits of college outweigh the financial costs.
According to the post-secondary advocacy nonprofit Complete Tennessee’s State of Higher Education report, “Between 2005 and 2015, Tennessee had the second-highest increase nationally in post-secondary education attainment (16 percent). Despite recent progress, stark attainment gaps persist across income, race, and geography. Students who are economically disadvantaged, students of color, and students from urban and rural districts overall continue to lag their more affluent, white, and suburban peers. ACT results indicate far too few students from all backgrounds graduate high school ready for college-level coursework.”
To this point, the Tennessee Higher Education Commission recently reported that 100 percent of graduates from three Shelby County high schools required remediation when they enrolled in college. This shows the ongoing need for enhanced readiness among high schools and need for higher education institutions to be prepared to better serve all their students upon enrolling them.
As Tennessee continues the state’s Drive to 55 — toward the goal of having 55 percent of the working-aged population with a high-quality post-secondary degree or credential by 2025 — we must stay mindful of the fact that an individual’s attainment of a college degree has a triple benefit: an increased wealth premium for the individual, wealth for the community and a better-educated society.
In these terms, the decreasing wealth premium for individuals is one measure. We are also mindful of the increased social cost and tax burden driven by low attainment. In Memphis, the total cost to taxpayers for dropouts and unprepared graduates in 2015 was $185 million for the Shelby County School system alone.
When thinking about the final component, it’s important to note that college graduates have been shown to be more likely to give to charity, volunteer and vote than those without a college degree.
Ultimately, as we examine the goal of true education, we still determine that a college degree (and just as important, all post-secondary credentials) is worth it and helpful in Tennesseans living a financially independent life, and in the state of Tennessee delivering on a very important triple bottom line.
Douglas Scarboro is senior vice president and regional executive of the Memphis Branch of the Federal Reserve Bank of St. Louis. His views expressed do not reflect official positions of the Federal Reserve Bank of St. Louis or the Federal Reserve System.