The United States needs more college graduates. Opinions vary on exactly how many, but our estimates that the nation will need an additional one million each year by 2020 to sustain its economic health. That would mean increasing today’s annual total—2.5 million—by 40 percent.

To meet this goal, universities and colleges would have to increase their output of graduates by 3.5 percent a year over the next decade. That’s a daunting task for two reasons. First, it would cost an additional $52 billion a year, based on 2008 costs to produce a graduate. Yet many states, plagued by fiscal woes, have recently lowered spending on higher education, a trend that’s unlikely to be reversed. Second, to achieve this increase, colleges would need to enroll many more than 3.5 percent more freshmen each year, because today, on average, only 40 percent of students who enroll go on to graduate.

To meet the target without spending more, colleges would simultaneously have to attract additional students, increase the proportion of them who complete a degree, and keep a tight lid on costs. Gaming the target by lowering the quality of the education or granting access only to the best-prepared students obviously wouldn’t count.

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