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GI Bill of Rights: A Profitable Investment for the United States

Servicemen’s Readjustment Act of 1944
The Servicemen’s Readjustment Act (better known as the GI Bill of Rights) provided government funds for education for all veterans returning from World War II. The educational costs included tuition, lab fees, books, health insurance and supplies. Students received up to $1,440 depending on the number of dependents, per year above tuition — this is the equivalent of $11,856 in 1994 dollars.

In 1988, the Congressional Subcommittee on Education and Health of the Joint Economic Committee produced an analysis of how much the country benefited from the GI Bill’s investment in education. The following are the major results of the report:

How Much Did the Government Invest in Veterans’ Education?
By approximately 1952, the government had spent $14 billion (1952 dollars) on educational and job training benefits for 7.8 million veterans. Of these funds, $7 billion was spent on college and graduate school for 2.2 million GIs.

How Much Did the Government and Economy Get Back for this Investment?
The first benefit from this investment was increased growth in the economy. The report calculated that about 40 percent of those who took advantage of the GI Bill would not otherwise have been able to attend college. The extra output those people created in the economy amounted to $35.6 billion (1952 dollars after factoring out inflation) over the next 35 years.

$12.8 Billion in Increased Tax Revenues from the GIs
The additional education for the returning GIs led to higher wages and more taxes for government. To be conservative, the report looked at how much extra taxes were paid by the 40 percent who would not have gone to college without the GI bill. Those extra taxes came to $12.8 billion (1952 dollars). As the chart below shows, the GI Bill was a tremendous investment for the United States. For every dollar invested in the GIs’ higher education, the government and economy received at least $6.90 in return.

Return on Investment in GI Bill of Rights
  In 1952 Dollars In 1994 Dollars
Cost for Sending GIs to College $7.0 billion $38.7 billion
Extra National Economic Output Due to Extra Education $35.6 billion $196.7 billion
Extra Federal Tax Revenues $12.8 billion $70.7 billion
Total Benefits $48.4 billion $267.4 billion
Amount Returned for Every $1 Invested

Sources: “A Cost-Benefit Analysis of Government Investment in Post-Secondary Education Under the World War II GI Bill,” Subcommittee on Education and Health of the Joint Economic Committee, December 14, 1988 and Labor Institute and Public Health Institute, Corporate Power and the American Dream: Toward an Economic Agenda for Working People. New York: The Apex Press, 1997.
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