Why Being a College Town Is Good for Business

Bashar Hanna
4 min readMay 1, 2023

Have you ever considered the economic benefit that a post-secondary institution can bring to the local economy? Certainly, being known as a university or college town comes with some prestige. It can be a sign that the area is a good place to live and offers a chance for people to pursue higher education.

It’s common for college graduates to settle in the cities where they went to school as they become familiar with their new community and find local job openings. There is also the prospect of research and development at an institute of higher learning. All this bodes well for the local economy. Let’s dive further into the benefits colleges and universities offer the area they’re in.

An increase in spending

The most visible impact for a city or town with a post-secondary institution is that more money comes into the area in terms of spending by students. Of course, students need places to live, so vacancy rates fall. Students also spend money on groceries, transportation, entertainment, and more. Local businesses will certainly see a bump in commerce, particularly during the school year.

Spending by the college itself is significant. Schools require many services and products, and this can mean more money flowing into the city’s economy year-round. Plus, professors and college administrators spend their salary locally as they move into the community and set up house. The accommodation required by visiting lecturers and people attending conferences and other events at the university is no small matter either.

Human capital development

Human capital, measured by the number of years of schooling and rates of return on schooling, is a key factor to consider. As well as the direct economic impacts that these institutions have, there is a noticeable increase in the skill level of the local workforce. This happens, in part, because they offer educational opportunities to residents in the community. In turn, businesses in the area are typically driven to create jobs that demand higher levels of education.

With the availability of college graduates ready to enter the workforce, new industries may be attracted to the city or town, or existing ones may decide to expand their operations. Human capital development can certainly have a wide-ranging influence on the local economy.

Additionally, institutions of higher learning require highly-skilled faculty, administrators, and research staff and will hire individuals of this caliber to support college programs. The community may be rewarded further with an increase in human capital if the university services the area with a teaching hospital, for example. Moreover, the local economy can benefit from any businesses started by college students or faculty.

Regional stability

In a college town, there is typically a larger proportion of individuals with post-secondary degrees. This points to a large number of students deciding to stay in the community where they have come to attend school and seek out local employment opportunities. A sizeable higher-education sector typically translates into more regional stability.

That’s because these jobs tend to be less vulnerable than other sectors when the economy is in a downturn. People with post-secondary degrees are apt to build long-term careers in their chosen field of study. Their investment in a local employer can come with a drive to further their education and expertise. With higher wages and consistent spending on local goods and services, they support the prosperity and longevity of many area businesses.

When high-earners are committed to making their home in a community and raising a family, the ripple effect is significant. Significant others look for employment and leisure pursuits, while children require schools, playgrounds, daycare, lessons, and activities. This brings another type of stability to the area.

Not only do colleges and universities help to create regional stability, but they can foster faster economic growth. This can involve more innovation and greater levels of productivity. It has been observed, for example, that local economic development benefits significantly from industries that can access technological training from colleges in their communities.

Research and development

Institutes of higher learning will typically have a strong interest in research and development. By devoting resources to this area, they can provide their students with the chance for direct learning. In addition, graduates are exposed to some of the latest innovations and the most recent scientific findings in their area of study.

Industries will often partner with colleges and universities and fund different research and development endeavors. This gives companies access to technology such as supercomputers and pioneering laboratories. Some enterprises set up in cities with universities so that they can have access to new processes or products developed by the school or the specific knowledge that they can provide.


In short, there are many ways that post-secondary institutions can benefit a local economy. From more spending and developing human capital to supporting economic stability and driving research and development, the effect is measurable.



Bashar Hanna

Dr. Bashar Hanna has spent nearly four years as the president and chief executive officer of Pennsylvania’s Bloomsburg University.