AMERICAN COLLEGES WITH THE LARGEST ECONOMIC IMPACTS: THESE UNIVERSITIES HAVE CREATED BILLIONS OF DOLLARS FOR THEIR STATES

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Colleges are an important engine of economic growth. They produce graduates who innovate, create and generate countless products, companies, and jobs. But colleges also do so much more for their economies. They are research hubs, startup incubators, and homes for the advancement of all sorts of beneficial things. When you start thinking about colleges as the centers that make their areas much more prosperous, you have to wonder which ones do this the best. This article is going to highlight to you the colleges responsible for the largest effects on America’s prosperity.

Some perceive colleges to be inefficient places filled with professors who are unable to work in the “real world.” But this couldn’t be further from the truth. Colleges generate billions and trillions of dollars a year, directly and indirectly, for their cities, states, and countries. And many professors are still active in their industries and help them thrive. So which colleges are doing this the best?

Before now, there had not been a definitive ranking of the colleges with the largest economic impacts. But this information is incredibly useful. So we’ve done the extensive research and made something that will show you clearly which colleges are great at improving the financial health of the areas around them.

Any one of the 30 colleges listed below is a great choice, whatever your field of study! Prospective students looking to enter a range of subjects can use this article to help with refining their college options. Knowing the colleges that are contributing the most to their economies should be a major deciding factor in your college choice. Even if there isn’t a college here that’s right for you, you can still use the information in this article to inform your ultimate college destination. We’ve included summaries of how each college is impacting its economy. We’ve done this so that you can take that information and compare it to your college choices. Hopefully, this article will aid you in attending a college that is contributing hugely to the world around it!

Methodology

Finding the colleges with the largest economic impacts has involved extensive research. Many colleges report their economic output. However, their reporting is sporadic, and some colleges have reports that are over 10 years out of date.

What information is available has been studied and updated. Realistic estimates of the economic impacts can be made through assessing new projects, yearly budgets and other growth statistics published by colleges since these economic reports. For instance, one of the most comprehensive studies of the economic effects of colleges comes from a 2006 paper published by Vanderbilt University. Obviously, much has changed since 2006. So the colleges in our list that were found in the 2006 paper have been researched to see how their economic impacts have evolved over the last decade.

Our overall rankings come from looking into the top American colleges as agreed upon by a range of lists and then looking into statements of impacts upon their economies.

Our full sources are as follows:

Department of Economics, Vanderbilt University, The Economic Impact of Colleges and Universities: http://www.accessecon.com/pubs/VUECON/vu06-w12.pdf

Citylab, The Economic Impact of College Graduates on Local Economies: https://www.citylab.com/life/2016/02/the-economic-impact-of-college-graduates-on-local-economies/435414/

Association of American Universities, Economic Impact: https://www.aau.edu/education-service/service/economic-impact

QS/Top Universities, Top Universities in the US 2019: https://www.topuniversities.com/university-rankings-articles/world-university-rankings/top-universities-us-2019

US News, National University Rankings: https://www.usnews.com/best-colleges/rankings/national-universities

What has factored into the rankings of the colleges below are the following criteria: gross economic impact the college produces, most value that graduates have added to their college’s local economy, number of jobs created by the college and alumni, number of businesses helped by the college and other examples of innovative economic boosting from the college.

Our results, from 30 to one, are below:

Rank School Location
1 Stanford University Stanford, CA
2 Massachusetts Institute of Technology Cambridge, MA
3 University of California, Berkeley Berkeley, CA
4 University of Wisconsin, Madison Madison, WI
5 University of Pennsylvania Philadelphia, PA
6 University of California, Los Angeles Los Angeles, CA
7 University of North Carolina, Chapel Hill Chapel Hill, NC
8 University of Maryland College Park, MD
9 Johns Hopkins University Baltimore, MD
10 Emory University Atlanta, GA

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  1. Stanford University
    Location

    Stanford, CA

    Citylabnames San Jose as being in the US metropolitan area that has benefited the most from college alumni. It states that Stanford University is producing the most of these economically beneficial graduates. Association of American Universities'sresearch on Stanford University is outdated. But it is interesting to see how the data it shows compares to the present day. In 2006, Stanford spent over $2.1 billion in its local counties, which was just under half of its total revenues. Additionally, in 2006 it was Silicon Valley's single largest employer. From 2017 to 2018, its revenues had increased to $6.3 billion. The college did not reveal the amount of revenue that was planned to go into the local economy in that year, but it did state that it was contributing $329 million to the construction of a new campus in Redwood City. It was also in the process of buying homes and apartments in the local area to expand housing opportunities for staff, students and faculty, and spending $500 million on this. As astounding as those figures are, they pale in comparison to the impact of Stanford's alumni. In its most recent report, from 2013, Stanford University revealed that almost 40,000 companies could be traced back to its graduates. These companies were employing 5.4 million people and generating $2.7 trillion in income per year.

  2. Massachusetts Institute of Technology
    Location

    Cambridge, MA

    In 2003 and 2014, MIT conducted surveys of its alumni to see how they were positively impacting the world economy. The 2003 study revealed that 20% of graduates at that time stated that they had started for-profit companies, with one quarter of these companies being located in Massachusetts. However, by 2014, the alumni start up creation figure had increased to 25% of responding graduates starting companies. What's even more impressive is that these alumni were employing 4.6 million people and generating $1.9 trillion per year. Additionally, almost a third of alumni companies were now based in Massachusetts. However, MIT's economic impact goes far beyond the success of its alumni. The college itself is its home city's second largest employer and largest taxpayer. Additionally, MIT is Top Universities/QS'snumber one college in America for 2019 and US News'sjoint third best national-university.

  3. University of California, Berkeley
    Location

    Berkeley, CA

    A 2007 report and a 2011 report highlight how University of California, Berkeley has grown its local economy rapidly. The 2007 report was brief, highlighting only that the college spent 81% of its $1.6 billion budget on salaries, goods and services in the Bay Area. It also noted that the college employed 25,700 people. The 2011 report showed that by that time, it was paying more than $2.5 billion in salaries. Also, the employment at Berkeley had grown to over 43,500 people. Overall, it had an economic output of more than $4.6 billion. More impressively, a 2014 report revealed that University of California, Berkeley alumni had created 2,610 active companies which employed 542,433 people. The revenue of these firms was estimated to be $317 billion per year. 55% of those companies were located in the local Bay Area.

  4. University of Wisconsin, Madison
    Location

    Madison, WI

    In the last three years, University of Wisconsin, Madison has gone from contributing $15 billion to $24billionto the state of Wisconsin. Most universities in America have benefited from the strengthening national economy, but this college's increase in financial output is phenomenal. It also states that in 2017, every dollar invested into the university led to a return of $23. Additionally, the college was proud of generating and supporting 167,000 jobs in the state. And three business sectors each received more than $1.5 billion from the University of Wisconsin, Madison's economic activity in 2017: real estate, hospitals and computer services.

  5. University of Pennsylvania
    Location

    Philadelphia, PA

    The University of Pennsylvania had an annual impact of over $14 billion in its home state in 2015, Association of American Universitiesreports. This translated into $39 million per day for the state of Pennsylvania and $29.6 million per day for the city of Philadelphia. The college was also its state's second largest employer, with over 37,000 individuals on the payroll. Additionally, the college revealed that it spent $344 million with Philadelphia based businesses. The University of Pennsylvania also has a range of economic inclusion initiatives that are boosting its local economy in developing areas. For instance, it ensures that 20% of its construction projects worth over $5 million are given to minority and women owned companies.

  6. University of California, Los Angeles
    Location

    Los Angeles, CA

    UCLA commissioned Beacon Economics, one of California's leading consultants, to research its 2018 economic impact report. The business discovered that the college had a statewide annual impact of over $11 billion. $4 billion of this was focused on the city of Los Angeles itself, showing that the college is measured in its home city and wider economic spending. And, impressively, over 72,000 full time Californian jobs have been supported due to the college's impact. On a much wider timeframe, UCLA's startup valuations have totaled $33 billion.

  7. University of North Carolina, Chapel Hill
    Location

    Chapel Hill, NC

    In 2015, the University of North Carolina, Chapel Hill was proud to announce that it had an annual economic impact of over $7 billion on its state. At the time, the college was especially pleased of the service that its medical center was providing. The medical center's Dean, William L. Roper, said, "At a time when North Carolina's health care needs are rising and the number of physicians is plummeting, our economic impact cannot be underestimated." Since 2015, all evidence points to the University of North Carolina, Chapel Hill's financial benefit to its state increasing significantly. For instance, in 2017, the college announced that its start ups and social ventures were adding $10 billion to the annual economy.

  8. University of Maryland
    Location

    College Park, MD

    Vanderbilt Universitydiscovered that in 2002, the University of Maryland was generating $5.93 for every dollar it spent, which led to a statewide economic impact of $1.8 billion. In the University of Maryland's latest impact report, which comes from 2008, its financial benefit had increased significantly in just four years. That report stated that in Maryland, the college supported $1 billion in income and $2.4 billion in business sales per year. Additionally, it produced $78 million in tax revenues for the state and local government. While the University of Maryland has not produced a more recent impact figure, an idea of its current output can be estimated from its 2018 budget. In 2018, the college's total operating budget was slightly over $2 billion. If we take the $5.93 produced for every dollar spent, this would give the college an overall economic impact of over $11 billion.

  9. Johns Hopkins University
    Location

    Baltimore, MD

    There is no doubt that Johns Hopkins University is doing great things for Baltimore and Maryland's economies. The last time the college assessed its economic impact, in 2014, it estimated it at $9.1 billion for the entire state. This includes over $65 million of medical care being provided to uninsured and underinsured patients. The college is also the state of Maryland's largest employer, with over 48,000 individuals on the payroll. Additionally, more than 74,000 alumni currently live in and contribute to the economy of Maryland.

  10. Emory University
    Location

    Atlanta, GA

    Website

    Atlanta is America's second fastest growing metropolitan economy. Its rapid growth can be seen in one of its most prestigious colleges, Emory University. Association of American Universities highlights a report from 2011 that stated that the annual impact of the college on the economy of Georgia was $5.1 billion per year. However, by 2017, this sum had increased to $9.1 billion per year. Some of this sum included $400 million in community health care. Additionally, 40% of Emory University's alumni stay in Georgia after graduation, creating businesses and contributing services to local industries indefinitely.

By BVS Staff
July 2020

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