Criteria for Public Investment in the Two-Year College: A Program Budgeting Approach

The two-year college differs in many important respects from the four-year one. Typically, students in the former carry greater academic risk, come from lower-income families, and have a larger nonwhite population. Most of the school's resources are devoted to career-oriented education and to the diverse needs of its adult community. Benefits consist of incremental lifetime earnings imputable to the two-year school. These earnings reflect higher starting salaries and higher rates of annual income growth, labor force participation, and employment (over high school graduates). Earnings are calculated for eight cohorts of black and white, male and female, and career and four-year college transfer students. Costs include explicit public and private outlays and the implicit cost of foregone income for full-time students. The internal rate of return, conservatively estimated, is 18 percent, consistent with the results of other studies of higher education.