Pomp and circumstance: states are looking for an economic boost by pushing for more college graduates.

• Author: Bautsch, Brenda
• Position: SPECIAL REPORT

A college degree is a worthwhile investment. Someone with an associate or bachelor's degree earns about $25,000 more a year than a person with a high school diploma. And college degrees are a pretty good deal for states, too. They translate into more revenue flowing into government coffers.

Given an average career of 40 years, that extra $25,000 a year translates into an additional $1 million in earnings. Higher incomes translate into higher tax revenues for states. College graduates pay more in income and sales taxes, and depend less on social service programs such as food stamps and Medicaid. States save an average of $1,377 annually in Medicaid costs for every person with a college degree, according to the National Center for Higher Education Management Systems.

College graduates also are more likely to be employed. The unemployment rate for all college degree holders is currently 4.2 percent, compared to the overall jobless rate of 8.8 percent. While the recession affected everyone, the average unemployment rate for recent college graduates was of 9.2 percent in 2010 while the jobless rate for recent high school graduates was a staggering 35 percent. Currently, about 38 percent of the U.S. population over age 25 has an undergraduate degree.

GRADUATING, NOT JUST ATTENDING

A big problem for states is that at least two out of five college students don't graduate. That makes it a risky investment not just for states, but for those left with student loans to pay back but no degree.

Between 2003 and 2008, state governments spent more than $7.6 billion on appropriations and financial aid to support college freshmen who dropped out before their second year, according to the American Institutes for Research.

Several factors increase the likelihood that a

student will drop out of college, including fulltime employment, dependent children, financial problems and weak academic preparation.

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State lawmakers want to increase completion. Indiana and Ohio are basing their funding on a university's performance, such as graduation rates, rather than on enrollment numbers. Supporters hope this will give colleges an incentive to focus on student success.

Florida and Louisiana have made it easier for students to transfer between colleges in the state. Rhode Island and Texas encourage students to graduate on time or early. Texas gives a $1,000 tuition rebate to students who graduate on time, and Rhode Island's Bachelor's Degree in Three...