In this LA Times op-ed, economics professor Shirley Svorny (Cal State Northridge) argues against the idea that if a state puts more kids through college, that will provide it with an economic boost. While the bigwigs in California's higher ed system want people to believe that, she says that "the state's prosperity rests on public policies that encourage economic activity, not on heavy subsidies to higher education."
But won't the added knowledge from college make workers more productive? Svorny rebuts that notion, observing that "artificially low fees attract some students who simply aren't suited to the academic rigors of a university. Ultimately, the presence of these lower-achieving students hurts those who are more academically inclined, as they end up in watered-down courses in which professors have to focus on bringing the low achievers along."
I would add that even for students who do study diligently, getting a college degree may be of little economic value. There is no automatic link between the number of sharp and highly educated people in a state and the creation of high-skill jobs.