#AskExcelinEd: What is the cost of a lost opportunity?

Maine, Massachusetts, New Jersey, Rhode Island
Opportunity

This is National Charter Schools Week and it’s time to talk about opportunity cost. This spring there have been serious efforts to slow charter school growth in states like Rhode Island, New Jersey, and New York. And states like Massachusetts and Maine already have strict caps on the number of charter schools. The lack of charter expansion means the constraint of opportunity. So I keep asking, what is the cost of a lost opportunity?

Estimating the Cost of a Lost Opportunity

We have known for a long time that the amount of money one earns in a lifetime correlates with the type of education and training one receives. The better the education, the higher the lifetime earnings. Our organization has researched this data extensively and you can learn more about those efforts at CredentialsMatter and PathwaysMatter.

The federal government acknowledges this correlation too. Take, for example, research from the Social Security Administration, which says that a person who earns a Bachelor’s degree will on average earn more than $2 million in their lifetime, while a person who does not attain a high school degree will earn about half as much.

Education and Lifetime Earnings

Degree AttainmentMenWomen
Less than High School$1,180,000$590,000
High School Diploma or GED$1,530,000$870,000
Some College$1,700,000$1,040,000
Bachelor’s Degree$2,190,000$1,320,000
Graduate Degree$2,680,000$1,690,000
Source: Social Security Administration

Each level of degree attainment opens the possibility of obtaining a more specialized degree or credential, which can then boost earning potential.

When students do not graduate from high school, their earning potential is capped. Parents know this already. When they see schools that have high graduation rates, they know it is more likely their own children may successfully graduate from high school as well.

Policymakers should care about graduation rates. The more income constituents produce, the more tax revenue is collected, and the more state and local governments can invest in the community. It is incumbent on community leaders to have an interest in the success of students.

Moratoriums, caps, and limits on the growth of excellent schools does real harm to students, families and the community. In fact, we can quantitatively estimate the harm.

For example, if a recent retroactive moratorium had been approved in Rhode Island, then the Rhode Island Nurses Institute Middle College would not be able to expand their high school by 228 students. If those 228 students attended Providence Public Schools instead, their collective lifetime earnings would likely decrease by more than $70 million. In other words, a missed opportunity likely could cost students $70 million, or over $300,000 per student.

Cost of a Lost Opportunity

StateCharterCharter Graduation RateDistrict Graduation RateTotal Cost of Lost Opportunity per Student
RIRI Nurses Institute Middle College91.8%73.6%– $307,885.85
NJTeam Academy Charter84.5%76.1%– $142,101.22
MEBaxter Academy for Tech & Sciences98%87%– $186,084.90
MAPioneer Charter School of Science97.3%74.9%– $378,936.40

Do you care about fairness or equity? What about economic opportunity?

If you care about fairness or equity, opportunity cost should catch your attention. For example, there is an ongoing conversation in New Jersey about charter expansion and segregation. The Education Law Center just published an amicus brief in a state supreme court case that could significantly limit charter expansion in the future.

Their argument goes something like this:

  1. charters have expanded quickly in Newark,
  2. that expansion means districts lose money, and
  3. many Black families are choosing charter schools which is exacerbating racial isolation
  4. therefore, charters should not be able to expand.

One question the argument does NOT address: what is the cost to students? North Star Academy currently serves about 5,921 students in the Newark area. The graduation rate at North Star is about 89%, compared with 76.1% in Newark public schools. The difference between the two means that those 5,921 students at North Star could earn $1.2 billion more in lifetime earnings than if they attended Newark Public Schools. That’s more than $218,000 per student in lifetime earnings. One might even say that every Newark student not allowed to attend North Star is being charged $218,000 over the course of their life.

Another example, look at Team Academy Charter in Newark. More than 88% of their students are Black, and the charter’s high school graduation rate is almost 10 percentage points higher than Newark’s traditional public schools. If Newark embraced charter school expansion and doubled the size of Team Academy Charter, the city could realize over $105 million in additional income for 745 more students. That would be like paying students $142,000 each. That is real money and real opportunity.

And we see similar caps in Massachusetts and Maine. Imagine what the economic impact of doubling the size of Baxter Academy for Tech & Sciences in Portland, ME? Perhaps an added $186,000 per student? Or what might happen if Pioneer Charter School of Science were allowed to add seats? Every added spot might pay that student more than $378,000 in lifetime earnings.

So before you move to constrain opportunity, perhaps consider what that constraint will cost students, families, and even future tax revenues. It is no exaggeration to say that billions of dollars of economic growth are at risk. More importantly, those billions could change the lives of students and families forever. All it takes is an opportunity.

Solution Areas:

Public Education Choice

Topics:

Charter Schools

About the Author

Sam Duell is the Policy Director for Charter Schools at ExcelinEd.

Solution Areas:

Private Education Choice, Public Education Choice