US & World Economies US Economy Education Ranking by State Here's a quick look at education rates and their effect on a state's economy By Kimberly Amadeo Kimberly Amadeo Kimberly Amadeo is an expert on U.S. and world economies and investing, with over 20 years of experience in economic analysis and business strategy. She is the President of the economic website World Money Watch. As a writer for The Balance, Kimberly provides insight on the state of the present-day economy, as well as past events that have had a lasting impact. learn about our editorial policies Updated on November 30, 2020 Reviewed by Robert C. Kelly Reviewed by Robert C. Kelly Robert Kelly is managing director of XTS Energy LLC, and has more than three decades of experience as a business executive. He is a professor of economics and has raised more than $4.5 billion in investment capital. learn about our financial review board Share Tweet Pin Email In This Article View All In This Article Equity in Education Education Score by State How Education Affects People and the Economy High School Graduation Rates Lower High-School Graduation Rates Spending Per Student The Bottom Line Frequently Asked Questions (FAQs) Photo: altrendo images / Getty Images Education is necessary for economic mobility. On average, Americans with college degrees are paid over $30,000 more than those with only high-school degrees. Education is so critical for success that many advocate that students be given the education they need to perform at an acceptable level. Equity in education is a step beyond equal education, which only promises the same level of funding. Equity in Education Without equity, education can create structural inequality. Children who don’t get that start in life won’t do as well as their better-educated peers. As a result, they will not be able to afford quality education for their children. It creates a domino effect on income inequality. But there is a great discrepancy between education levels by state. One reason for the discrepancy is the strength of the state economy. Another is the amount of funding states devote to education. But the investment isn’t enough. States must also devote specialized programs to children most at risk. This includes efforts to prevent teenage pregnancy. Education Score by State Since education and wealth are so highly correlated, it makes sense that states with the strongest economies are more likely to have the highest education scores. According to the U.S. Department of Education’s Nation’s Report Card, these are the 10 highest states in eighth-grade reading scores: MassachusettsNew JerseyConnecticutVermontNew HampshireUtahWisconsinColoradoOhioIdaho Of these, 50% are also among the states with the highest median incomes. They are New Jersey, Massachusetts, Connecticut, Utah, and New Hampshire. These states contain bedroom communities for major metropolitan areas. That helps them attract world-class universities that improve their education rankings. This list shows the states with the lowest eighth-grade reading scores, with New Mexico having the worst scores in the nation. OklahomaHawaiiNevadaLouisianaMississippiTexasWest VirginiaAlabamaAlaskaNew Mexico These states’ economies depend on agriculture, oil, and coal. These industries tend to offer lower-income positions, with not as many high-paying jobs as high tech, health care, and finance. How Education Affects People and the Economy A high-school diploma is necessary to get into college and get a well-paying job. A 2018 Federal Reserve study found there are three ways education creates wealth. First, families headed by educated parents earn more than those without college degrees. That gives the children a head start in life. They can attend private schools and receive better educations themselves. The second is an upward-mobility effect, which occurs when a child is born into a family without a college degree. Once the child earns a diploma, the entire family becomes wealthier. The study found that a college diploma boosted family wealth by 20%. In families where both the parents and child graduated from college, wealth improved by 11%. Third, a downward-mobility effect is created. Children whose parents didn't graduate from college fell by 10% in wealth. Children whose parents graduated from college, but who did not themselves graduate, did worse. Their wealth fell by 18%. The National Center for Education Statistics reports on the percentage of students who graduated on time. Each state submits data to the U.S. Department of Education on how many ninth grade students receive their diploma in four years. The U.S. average for 2017 and 2018 was 85%. High School Graduation Rates New Jersey and Iowa are tied for the best graduating rate (91%). Iowa has a special program, called SUCCESS, that assigns case managers to help the students most at risk. For some of these students, the case manager is the only adult who advocates for them. Many of these students dropped out. Next are Wisconsin, Tennessee, Texas, Alabama, Kentucky, and West Virginia at 90%. West Virginia created an Early Warning System to identify students at risk of dropping out. The system measures 45 indicators such as attendance, behavior, and grades. It allows teachers to provide the support these students need to stay in school. The four states that graduate 89% of their students are Nebraska, Montana, Arkansas, and New Hampshire. Another four states graduate 88% of their students: North Dakota, Virginia, Connecticut, and Massachusetts. Lower High-School Graduation Rates The state with the lowest percentage of graduating students is New Mexico at 74%. Next are Oregon, Arizona, and Alaska, each at 79%. New Mexico and Alaska have low eighth-grade reading scores. Students who don’t read well at this level will logically have more trouble graduating. Alaska also has one of the highest overall birth rates. Teenage mothers there are more likely to drop out of high school. Colorado, Louisiana, Idaho, Michigan, and South Carolina graduated 81% of their students, while Oklahoma, Ohio, Georgia, Wyoming, and New York graduated 82%. Spending Per Student The average spending per U.S. public elementary school student was $13,962 in 2017, according to the National Center for Education Statistics. The top 10 states spent 30% to 100% more than the average. New York—$25,985Connecticut —$21,647 New Jersey—$21,531Wyoming—$20,508Delaware—$20,035 Vermont—$19,702 Massachusetts—$19,101 Alaska—$18,897Pennsylvania—$18,149Rhode Island—$18,020 Four of these states are also among the ones with the top 10 reading scores. They are Massachusetts, New Jersey, Connecticut, and Vermont. But high spending doesn’t always translate into high scores. Six states—New York, Delaware, Alaska, Pennsylvania, Rhode Island, and Wyoming—are not among the top 10. In fact, Alaska is among the bottom 10. The 10 lowest-spending states spend more than 25% less than the average. Alabama—$10,590Nevada—$10,384 Florida—$10,227Tennessee—$10,062Mississippi—$9,838North Carolina—$9,342Arizona —$9,214Oklahoma—$9,167 Utah—$8,726Idaho—$8,665 The Bottom Line Education and earning potential are directly related. People with access to a higher level and quality of education usually earn more and have more economic mobility. Those with less or no access might not have the same financial opportunities. College graduates have a higher chance of building their wealth than high-school graduates. Those who don’t graduate from college won’t qualify for higher-paying jobs, raise their standard of living, or be as able to afford a good education for their children. States that boast high average income usually have the highest education scores. Massachusetts and New Jersey, for example, have world-class universities and high standards of living. Conversely, states with a low quality of education, such as New Mexico and Alaska, have low average incomes. These places have also produced a low percentage of high-school graduates. Frequently Asked Questions (FAQs) What are the state rankings when it comes to funding university education? In 2020, Alaska's state government spent $19,672 per full-time-equivalent student in public universities. Hawaii came in second ($19,088), followed by Wyoming ($15,795) and Connecticut ($14,449). The national average was $7,566. How do federal, state, and local governments share responsibility for education? While the responsibility for education rests primarily with state and local governments, the federal government does provide roughly 8% of funding for elementary and secondary education. It also enforces civil rights.States decide how much power to give local jurisdictions. In California, for example, school districts have an unusual level of authority, compared to other local authorities. They can essentially do as they please, without seeking the state's consent, so long as their actions don't violate state law. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Federal Reserve Bank of New York. "Despite Rising Costs, College Is Still a Good Investment." United States Census. "New Data Show Income Increased in 14 States and 10 of the Largest Metros." The Nation's Report Card. "State Profiles." Federal Reserve Bank of St. Louis. "The Financial Returns From College Across Generations: Large but Unequal." National Center for Education Statistics. "Public High School Graduation Rates." Des Moines Public Schools. "SUCCESS." West Virginia Department of Education. "West Virginia Continues to Lead the Nation in High School Graduation Rates." CDC. "State and Territorial Data." National Center for Education Statistics. "Revenues and Expenditures for Public Elementary and Secondary Education: FY 17," Pages 9-10. National Center for Science and Engineering Statistics. "State Support for Higher Education Per Full-Time Equivalent Student." Department of Education. "The Federal Role in Education." California Department of Education. "Local Control: Districts and Counties."