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There are similar numbers of female and male graduates of professional degree programs,3 such as those in medicine and law, and these graduates are among the highest paid in the U. S. labor market. Table 3 shows that both women and men are expected to earn around $2. 5 million or higher as graduates with popular professional degrees though men still earn substantially more. In particular, men with medical, dental, optometry and veterinary degrees have massive earning potentials slightly less than $3.
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The non market benefitsthose extending beyond the individualare trickier to conceptualize and more difficult still to measure because there is no observable market transaction. According to McMahon 2009, 2010, private non market benefits correspond to the ways individuals use their human capital at home or in their communities. Examples of social benefits include contributions to democratic institutions, human rights, political stability, lower state welfare costs, lower health costs, lower public incarceration costs, contributions to social capital, to the generation of new ideas These social or general welfare benefitsmostly non pecuniaryare enjoyed by the individual as well as family, community, state and nation. McMahon claims that there is a significant government local, state and federal underinvestment in two year and four year colleges and universities, which in turn, contributes to a nationwide skill deficit. Whether a nationwide or statewide skill deficiency exists is a major topic of discussion andeven if all can agree on what a skill isthe presence of this gap indicates that there is an underinvestment in higher education. One of the paneliststhe state legislatorraised a similar concern and cited an example from more than 50 years ago. In light of the Cold War and the Soviet launch of Sputnik in 1957, the U. S. poured resources into the space program and other technologies to, as they may have said back then, Beat the Ruskies! It was a matter of national pride, if not national survival, and the government had an active role in providing resources to expand the countrys human capital pursuant to winning the Cold War. While the challenges of today may not be as existential or as singular, certainly there are intractable problems that are of sufficient scope that they warrant providing additional resources to build the stock of human capital to solve them. Thus, given that the benefits of higher education range from private individual to public societal and many points in between, the mixed model of funding seems to align those who benefit with those who pay. Moreover, students should have skin in the game. While McMahons research suggests the cost sharing ratios between individual and government may need revision, other research supports the need for students to foot the bill for a portion of their postsecondary education. Hamilton 2013 found a negative relationship between the amount of parental aid received and students grade point averages GPAs. Put simply, students who pay perform better. There is a caveat. While parental aid decreases student GPA, it increases the odds of graduating because, she posits, the lack of resources is the most common reason students stop, or drop, out. This suggests that the mixed model aligns benefits with costs and removes some disincentives to underperform. The mixed model of fundingstudent tuition, state support and benefactorsto reflect the mixed model of benefits may suggest that there is an optimal balance. Reasonable people may disagree what that balance is, however. As students watch their tuition rise at nearly four times the rate of inflation while state appropriations for state supported schools decline, they are probably not thinking that the current system is balanced. Indeed, the balance of cost sharing for public higher education has shifted toward the student within the last generation. States are rapidly becoming minority shareholders in the higher education of their citizens. Figure 3 shows how state appropriations for Indianas public two year and four year universities have changed in recent years. On average, Indianas public two year institutions experienced a more dramatic decline 20 percentage points in state appropriations as a percentage of core revenues,6 compared to Indianas public four year institutions that decreased 8 percentage points from 39 percent to 31 percent. In most cases, higher education appropriations decreased because states experienced rising costs in public K 12 education, medical care, social services and corrections, in addition to slow revenue growth resulting from the prolonged economic stagnation. There is at least one more force at play in finding the right balance: fighting the rising cost of delivering higher education. In line with Martin and Hills findings, the Center for College Affordability and Productivity published a policy paper in 2010 suggesting several ways that colleges and universities could achieve true cost reform. The strategies are summarized in Table 1. The first four categories, Use Lower Cost Alternatives to Exploit Technology, are those more akin to decisions or policies internal to the university. The strategies to Improve Competition are more akin to the external forces discussed above. In other words, most of the cost saving actions are those that the university itself can implement. Although some of their proposed strategies are viewed as more controversial than others, some colleges and universities have tried one or more of these strategies with varying degrees of success. For example, several universities, including two in IndianaBall State University and Manchester College have created three year bachelors degree options for their students, but early results show these programs are not currently popular. According to a 2011 Washington Post article, Ball State enrolled 29 students in their Degree in 3 program, while Manchester registered 20 students in their Fast Forward Program. 7 This slow start, however, does not mean three year bachelors degree programs will never grow in popularity.