College degrees began to lose their luster in 2008 when the economy crashed and recent graduates found themselves with a lot of debt and few job prospects. Despite nearly 10 years of angst over the student debt crisis and the value of now exorbitantly expensive college degrees, Americans remain enamored with higher education. Many parents still believe college holds the key to achieving the American dream.
But a new study from American Enterprise Institute scholars Mark Schneider and Rooney Columbus suggests students can make more money with less investment through associates degrees or subbaccalaureate certification programs. While bachelor’s degree–holders make more money on average than those without, not all degrees carry the same weight.
“The important question, thus, is not whether degrees have value but what types of knowledge and skills are in greatest demand and are, in turn, rewarded in the labor market,” Schneider and Columbus write. “Framed this way, the degree a student pursues means much less than commonly held: It is the outcome that matters. And once we can measure more precisely what the labor market actually rewards, we can begin to identify specific institutions, programs, and fields of study that offer better (or worse) ways for college students to launch their careers and earn good wages.”
The researchers looked at data from three states: Florida, Texas, and Tennessee. In Florida, graduates with the highest median income five years after leaving school held associates degrees and worked as physicians assistants, making about $112,200 a year. Those with bachelor’s degrees in health science fields came in second, making $106,900 a year. Of the 16 degrees with which graduates earned more than $75,000 a year, three were associates and three came from apprenticeships. All of the bachelor’s degrees involved engineering or computer science. Students in all three apprenticeship programs made more than $80,000 a year, with elevator mechanics bringing in the most—$96,600 a year.
Using data from Texas, Schneider and Columbus estimated return on investment (ROI) over a 20-year period and came up with a list of 39 programs that boosted graduates over the $1 million mark. Of those, 19 offered associate degrees, and six provided subbaccalaureate certificates from community colleges. A bachelor’s degree in business from the University of Texas at Austin provided the best ROI, $1.6 million. But an associate degree in fire protection from Austin Community College came in a close second at $1.5 million.
Schneider and Columbus offer several caveats to their conclusions. First, associates degree programs tend to have lower rates of completion than four-year degrees, and students who do finish tend to come from more affluent backgrounds. Second, it’s hard to discount the inherent marketability of degree-holders from their degrees, meaning the fields of study may partially reflect the success of those who enter them, rather than conferring that success automatically. And third, some of the highly paid careers that don’t require bachelor’s degrees have relatively few workers, which could help drive up their earnings.
The researchers also acknowledge other studies that have suggested vocational training doesn’t pay off in the long run because workers have a harder time adjusting when their career fields experience significant changes. But their report offers high school students some important food for thought as they contemplate their futures. Those psychology courses might provide some entertaining classroom discussions, but they probably won’t help pay back the money students borrow to take them.