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Economic Impact and Return on Investment of UTC

UTC contributes more than $285 million a year to the local economy, provides 4,337 jobs, and receives only 6.7% of Tennessee’s total higher education appropriations, with 59% of University funding coming from other sources.

These findings were recently released in “The Economic Impact and Return on Investment of UTC:  What Tennessee Taxpayers Get for Their Money 2005-2006,” written by Dr. J.R. Clark, Scott L. Probasco, Jr., Chair of Free Enterprise.

“Both students and tax payers might be surprised to learn exactly how their respective investments of time and money pay off in the future,” Clark said in the study.

As a result of the education received at UTC, the average male member of the Fall 2003 entering class who completes his undergraduate training at UTC can be expected to earn approximately $1.47 million more over his lifetime than his counterpart with only a high school diploma.  A male graduate student will earn an additional $1.41 million more than their college undergraduate counterpart during the earning years.  The average female who completes her undergraduate training will earn $1.14 million more than her counterpart with a high school education.  Females who go on to earn a graduate degree will earn $723,000 more than her undergraduate counterpart.

The vast majority of these students, 88 percent of undergraduates and 83 percent of graduate students, will remain in Tennessee after leaving UTC.  That means the incremental future earning and spending, attributable to an education at UTC, will contribute significantly to the future economic development of the state and the tax revenues the state collects.

For every $1 spent by the state on the Fall 2003 entering UTC class, the state will receive $1.45 back in taxes, on a present discounted value basis.  This translates to a 5.14 percent rate of return on the state’s investment in the university.

In 2003, UTC brought into the state nearly $37 million from external sources, such as grants, foundation spending and tuition from out of state students.  The sales tax revenue generated by this income flow amounts to approximately $2.2 million annually.

“In summary, the three major economic contributions UTC makes to Tennessee, an educated labor force for the private and public sector, a large increment in state tax revenues from the additional earnings of UTC in-state resident alumni, and the boost to the state income and revenue from UTC as an “export base,” all suggest that the engaged metropolitan University of Tennessee at Chattanooga is an extraordinary investment for the state,” said Clark.

September 15, 2006

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