If you considering college tuition as an investment, here’s the investment analysis of a degree from EMCC:
Student Perspective: In FY 2016-17, EMCC served 13,080 credit and 1,315 non-credit students. In order to attend the college, the students paid for tuition, fees, books, and supplies. They also took out loans and will incur interest on those loans. Additionally, students invested their time, giving up money they would have otherwise earned had they been working instead of attending college. The total investment made by EMCC’s students in FY 2016-17 amounted to a present value of $56.1 million, equal to $14.1 million in out-of-pocket expenses (including future principal and interest on student loans) and $41.9 million in forgone time and money.
In return for their investment, EMCC’s students will receive a stream of higher future earnings that will continue to grow throughout their working lives. For example, the average EMCC associate degree graduate from FY 2016-17 will\ see an increase in earnings of $9,700 each year compared to a person with a high school diploma or equivalent working in Arizona. Over a working lifetime, the benefits of the associate degree over a high school diploma will amount to an undiscounted value of $417.1 thousand in higher earnings per graduate. Altogether, EMCC’s FY 2016-17 students will receive $268.4 million in higher future earnings over their working lives, as a result of their education and train- ing at EMCC.
EMCC degrees have a 4.8 benefit-cost ratio. In other words, for every dollar students invest in EMCC, in the form of out-of-pocket expenses and forgone time and money, they will receive a cumulative value of $4.80 in higher future earnings.*
Taxpayer Perspective: For every dollar of public money invested in EMCC, taxpayers will receive a cumulative value of $6.10 over the course of the students’ working lives.
EMCC generates more in tax revenue than it takes. These benefits to taxpayers consist primarily of taxes that the state and local government will collect from the added revenue created in the state. As EMCC students will earn more, they will make higher tax payments throughout their working lives. Students’ employers will also make higher tax payments as they increase their output and purchases of goods and services. By the end of the FY 2016-17 students’ working lives, the state and local government will have collected a present value of $193.5 million in added taxes.
Benefits to taxpayers will also consist of savings generated by the improved lifestyles of EMCC students and the corresponding reduced government services. Education is statistically correlated with a variety of lifestyle changes. Students’ EMCC educations will generate savings in three main categories: 1)healthcare, 2) crime, and 3) income assistance. Improved health will lower students’ demand for health care services. In addition, students will be less likely to interact with the criminal justice system, resulting in a reduced demand for law enforcement and victim costs. EMCC students will be more employable, so their reduced demand for income assistance such as welfare and unemployment benefits will benefit taxpayers. For a list of study references, contact MCCCD for a copy of the district’s main report. Altogether, the present value of the benefits associated with an EMCC education will generate $7.1 million in savings to state and local taxpayers.
Total taxpayer benefits amount to $200.6 million, the present value sum of the added taxes and public sector savings. Tax- payer costs are $32.9 million, equal to the amount of state and local government funding EMCC received in FY 2016-17. These benefits and costs yield a benefit-cost ratio of 6.1. This means that for every dollar of public money invested in EMCC in FY 2016-17, taxpayers will receive a cumulative value of $6.10 over the course of the students’ working lives. The average annual internal rate of return for taxpayers is 15.4%, which compares favorably to other long-term investments in the public and private sectors.*
Social Perspective: Society as a whole in Arizona benefits from the presence of EMCC in two major ways. Primarily, society benefits from an increased economic base in the state. This is attributed to higher student earnings and increased business output, which raise economic prosperity in Arizona.
Benefits to society also consist of the savings generated by the improved lifestyles of EMCC students. As discussed in the previous section, education is statistically correlated with a variety of lifestyle changes that generate social savings. Note that these costs are avoided by the consumers but are distinct from the costs avoided by the taxpayers outlined above. Healthcare savings include avoided medical costs associated with smoking, alcohol dependence, obesity, drug abuse, and depression. Savings related to crime include reduced security expenditures and insurance administration, lower victim costs, and reduced expenditures by the criminal justice system. Income assistance savings include reduced welfare and unemployment claims. For a list of study references, contact MCCCD for a copy of the district’s main report.
Altogether, the social benefits of EMCC equal a present value of $2.7 billion. These benefits include $2.7 billion in added income through students’ increased lifetime earnings and increased business output, as well as $15.8 million in social savings related to health, crime, and income assistance in Arizona. People in Arizona invested a present value total of $99.9 million in EMCC in FY 2016-17. The cost includes all the college and student costs. The benefit-cost ratio for society is 26.8, equal to the $2.7 billion in benefits divided by the $99.9 million in costs. In other words, for every dollar invested in EMCC, people in Arizona will receive a cumulative value of $26.80 in benefits. The benefits of this investment will occur for as long as EMCC’s FY 2016-17 students remain employed in the state workforce.*
*Source: Emsi. (March 2019). The Economic Value of Estrella Mountain Community College Executive Summary. Avondale, AZ: Estrella Mountain Community College.