The benefits generated by Gateway affect the lives of many people. The most obvious beneficiaries are the college’s students; they give up time and money to go to the college in return for a lifetime of higher wages and improved quality of life. But the benefits do not stop there. As students earn more, communities and citizens throughout Kentucky benefit from an enlarged economy and a reduced demand for social services. In the form of increased tax revenues and public sector savings, the benefits of education extend as far as the state government.
Investment analysis is the process of evaluating total costs and measuring these against total benefits to determine whether or not a proposed venture will be profitable. If benefits outweigh costs, then the investment is worthwhile. If costs outweigh benefits, then the investment will lose money and is thus considered infeasible. In this chapter, we consider Gateway as a worthwhile investment from the perspectives of students, taxpayers, and society.
- Gateway’s FY 2018-19 students paid a present value of $7.6 million to cover the cost of tuition, fees, supplies, and interest on student loans. They also forwent $17.5 million in money that they would have earned had they been working instead of attending college.
- In return for their investment, students will receive $217.3 million in increased earnings over their working lives. This translates to a return of $8.70 in higher future earnings for every dollar students invest in their education. Students’ average annual rate of return is 30.6%.
- Taxpayers provided Gateway with $8.7 million of funding in FY 2018-19 (excluding state allocations recovered by KCTCS). In return, they will benefit from added tax revenue, stemming from students’ higher lifetime earnings and increased business output, amounting to $64 million. A reduced demand for government-funded services in Kentucky will add another $4.6 million in benefits to taxpayers.
- For every dollar of public money invested in Gateway, taxpayers will receive $7.90 in return, over the course of students’ working lives. The average annual rate of return for taxpayers is 19.6%.
- In FY 2018-19, Kentucky invested $43.1 million to support Gateway. In turn, the Kentucky economy will grow by $654.5 million, over the course of students’ working lives. Society will also benefit from $19 million of public and private sector savings.
- For every dollar invested in Gateway in FY 2018-19, people in Kentucky will receive $15.60 in return, for as long as Gateway’s FY 2018-19 students remain active in the state workforce.
* For the purposes of this analysis, Northern Kentucky is comprised of Boone, Campbell, Grant, Kenton, and Pendleton Counties.