What the Economy Gets When Colleges Invest in Mental Health

A California program with an $8.7 million annual budget is estimated to produce $56 million in society-wide gains.

In response to rising rates of depression among students and increased demand for therapy, many American universities have been ramping up their mental-health services. These colleges surely want to take care of their students, but it has other benefits too: Mental-health disorders can hinder educational outcomes, lowering grades, delaying students’ graduations, and causing students to drop out.

So, as with a lot of other things involving higher education, some colleges are finding that investing in mental-health services isn’t just a caring thing to do, but something that brings society-wide benefits. A new report from the RAND Corporation suggests that these investments can pay dividends long after graduation by limiting mental-health disorders’ negative effects while students are still in college, which increases their average lifetime earnings.

The study looked at a mental-health initiative in California called the California Mental Health Services Authority, or CalMHSA, which was launched in 2011. CalMHSA currently allots public funding for mental-disorder intervention programs to 10 University of California campuses, 23 California State University schools, and 112 state community colleges. CalMHSA’s annual investments total about $8.7 million (not a huge amount on the scale of campus-wide health service budgets) and according to RAND’s analysis of CalMHSA’s survey data, they led to a 13.2 percent increase in the number of students receiving treatment at California’s public colleges—which by RAND’s estimates led to an additional 329 students graduating.

One study by the Federal Reserve of San Francisco found that over the course of a lifetime, people with a four-year college degree earn about $830,000 more than those without one. Using a more conservative estimate, the RAND study predicts that the gains from these additional 329 graduates work out to $56 million of “societal benefit,” in the form of the lifetime earnings of those graduates.

The RAND researchers hope that a cost-benefit analysis like this can help put mental-health investments into perspective. “[I]t is important that we understand that investing in student mental health not only can get more students into care, but that society benefits financially through increased wages and tax revenues,” said Scott Ashwood, the study’s lead author and an associate policy researcher at RAND, in a press release.