The purpose of this report is to provide policymakers and the general public with basic information about both the benefits and the costs of higher education. Some of this information illuminates the difference that postsecondary education makes to the prosperity of a state and its citizens. Also contained in this report are lesser known facts about the costs of higher education and who pays for it. The report begins by evaluating the current evidence on the benefits of higher education and how Michigan would benefit from increased participation in higher education. Information is provided on what (and whom) it costs to provide higher education in Michigan. The report concludes by considering the costs of increased participation to the state, the student and the institutions, what trade offs there might be, some expectations might be, and what policies and practices would have to change to make increased participation work. Two trends in the data presented appear both clear and essential to a discussion of Michigan's future. The first trend concerns the benefits of higher education: more education makes a difference. The individual benefits associated with postsecondary education cut across all aspects of quality of life, but the economic benefit is particularly compelling. College graduates earn more money, and the difference in income between those with post-secondary education and those without it has continued to widen because the earning power of those without it has shrunk consistently over the past 30 years. Once a desirable advantage in employment, post-secondary education has increasingly become a prerequisite to stable employment and a middle-class income. The data also suggest that what is good for the individual is good for the state: states with higher rates of college graduates are more prosperous than those with lower rates. The second trend in the data presented in this report concerns the costs of higher education. Although it is true that the price of college has consistently risen faster than inflation, a perhaps more important trend is that the cost of college has fundamentally shifted from the state to the student. Thirty years ago, state appropriations accounted for 75 percent of the public university budget; today that portion is less than half. Additionally, state and federal financial aid to students has failed to keep up with inflation, meaning that students and families have had to shoulder more of the costs of college than ever before. The convergence of these two trends (the increasing importance of postsecondary education with the shift in financing that education in public institutions from the state to the individual) is arguably the greatest challenge facing Michigan and its leaders. The policy options available to state officials in response to this challenge is complicated by the voluntary nature of postsecondary participation, the relatively autonomous status of Michigan's public universities, and the inherent difficulty of expanding the capacity of higher education in Michigan without diminishing its quality. The author concludes that the only certainty is that Michigan's current path of relatively low post-secondary participation and relatively low state support for those who pursue it is a dead end. Finding the right balance between cost, access and quality is crucial to the state's economic future. (Contains 117 endnotes, 5 figures, and 21 tables.) [This report was written with assistance from Jennifer P. Hodges.]