Does a college graduate earn more than someone with only a high school education?

When President Joe Biden announced today his long-awaited plan to deliver on a campaign promise to provide $10,000 in federal student debt cancellation for millions of Americans, many wondered if a college education is worth the cost.

About 16 million students are enrolled in U.S. colleges, aiming to get a job that gives them financial security.

Biden spoke of the hardship families go through in sending their children to college.

“My dad was like millions of parents all across the country: ‘I want to help the kids get to school, but there was just no way to be able to do it.’ You know, because he believed that education is a ticket to a better life,” the president said.

Biden recalls his father telling him: “I mean, you can still get fired if you’re a college man, but they can never take it away from you. They can never take education away.”

But do students who pursue higher education actually earn more than they would have if they never pursued it in the first place? In other words, are they earning more than the average high school graduate?

That’s a question Michael Itzkowitz, higher education fellow at the public policy think tank Third Way, aimed to answer in 2019. The Star-Telegram spoke with Itzkowitz about what he found.

Do postsecondary graduates earn more?

Analyzing employment data from the U.S. Department of Education, Itzkowitz found that many higher education institutions are failing to grant financial security to most of their students, so they’re actually worse off than if they hadn’t enrolled. In fact, more than half of colleges left the majority of their students earning less than $28,000 a year. That’s the typical salary of a high school graduate.

“A lot of institutions unfortunately leave students earning too little and with unmanageable debt,” Itzkowitz said. “We are getting to a breaking point in higher education, to where people who attend college and policymakers are starting to ask whether or not students and taxpayers are getting a return on their investment and whether institutions are ultimately providing students with the quality education that they were told they’re signing up for.”

For a whopping 52% of higher education institutions, over half of students who enroll are earning less than a high school graduate six years later. And at 6.5% of higher education institutions, more than 80% of students fail to earn more than the average high school graduate six years after enrollment. Even after a decade, more than a quarter of institutions still fail to have the majority of their students earn more than $28,000.

Certain sectors show substantially higher rates of students failing to earn more than the average high school graduate. The for-profit sector shows the most worrisome employment outcomes within higher education: four-in-five schools show that the majority of their students fail to earn more than someone without a college education. While private non-profit institutions have the strongest earnings outcomes, 7.5% of schools still show the majority of students earning less than a high school graduate six years later. Over half of public colleges show negative earnings for the majority of their students.

Post-enrollment earnings also vary based on the type of credential offered, whether a certificate, associate’s degree or bachelor’s degree. At institutions that focus on short-term credentials, fewer students earn more than the average high school graduate. Certificate-granting institutions fared the worst, and bachelor’s degree-granting institutions fared the best.

College programs may lead to negative employment outcomes for a variety of reasons: the curriculum may not match up with employer needs, students may not be getting the career resources they need or there may not be suitable jobs available in that region. Because college administrators have access to employment outcomes for the programs, they can dig deeper into why they’re not as effective as they should be.

“There are lots of actionable steps that college administrators can take to quickly adjust their program offerings that will help raise the outcomes for all students,” Itzkowitz said.

How much federal aid is given to schools with poor outcomes?

Taxpayers subsidize colleges with hundreds of millions of dollars in federal student aid every year. Itzkowitz’s study examined the amount of federal student aid disbursed to institutions with the worst employment outcomes.

A colossal $2.8 billion was disbursed in a single academic year to institutions with over 70% of students earning less than the average high school graduate six years later. And over $770 million went to institutions with more than four-fifths of students failing to meet the same economic threshold. For schools that left over 70% of students failing to meet the benchmark even ten years later, they still received $1.4 billion in financial aid.

What parents and students should know

“This kind of shows that students need to be very careful and conscious when they are making their college decisions, as they can have very positive but also very drastic outcomes, depending on where they go and what they study,” Itzkowitz says.

The U.S. Department of Education’s College Scorecard is a helpful starting point. The database gives students and families information on how much a college education is going to cost out-of-pocket, as well as how much students are likely to earn after they attend a specific institution.

“It’s very important that students are at least aware of their potential payoff. There maybe lower paying professions that students wish to pursue that definitely have societal value,” Itzkowitz said. “They should just ensure that the cost of their education is affordable, and that they’re able to still make a livable wage after. There are lots of options across the United States that will help ensure that for students.”

While the federal government does provide data on earnings, it has no laws in place to ensure that students are financially better off after attending a college that is funded by federal grants and loans. The gainful employment rule, a program proposed by the Biden administration that could go into effect as early as 2024, would aim to ensure that college graduates are making enough to manage their student debt.

“This is really a first step, and Congress can follow this lead and implement laws itself to better ensure that students have good outcomes at federally funded institutions and that taxpayers are also getting a strong return on investment through the billions of dollars that we put into the higher education system each and every year,” Itzkowitz says.