Most people go to college to improve their financial prospects, although there are other benefits to attending a postsecondary institution. But as the average cost of a four-year degree has risen into six figures, even at public universities, it can be hard to know if it’s money well spent.
A new analysis from the HEA Group, a research and consulting firm focused on college access and success, may help answer the question for students and their families. The study compares the average earnings of former college students 10 years after enrolling with basic income benchmarks.
The analysis found that the majority of colleges exceed minimum financial measures for their graduates, such as having a typical annual income that is greater than that of a high school graduate without a college degree ($32,000, per federal Scorecard data).
However, more than 1,000 schools did not exceed that limit, although many of them were for-profit colleges that focused on short-term credentials rather than traditional four-year degrees.
Seeing whether a college’s former students earn “reasonable” incomes, said Michael Itzkowitz, founder and president of the HEA Group, can help people weigh whether they want to cross certain institutions off their list. Someone deciding between similar colleges, for example, might look at the institution that has produced students with significantly higher incomes.
While income is not necessarily the only criterion to consider when comparing schools, Mr. Itzkowitz said, “it’s a very good starting point.”
The report used data from the Department of Education’s College Scorecard to assess the earnings of about five million former students who had attended about 3,900 institutions of higher education 10 years after they first enrolled. (The analysis includes data for those who did not complete their degree.) The report includes public colleges as well as private nonprofit and for-profit schools. schools can offer non-degree certificates, associate degrees, and bachelor’s degrees.
The analysis found that schools where students earned less than their peers who never went to college were generally those that offered non-degree certificates, which can often be completed in 18 months or less, as well as for-profit institutions, though the list also includes some public and private non-profit schools. At 71 percent of for-profit schools, the majority of students earned less than high school graduates 10 years after enrolling, compared with 14 percent of public institutions and 9 percent of private nonprofit schools, Mr. Itzkowitz.
“College is, indeed, worth it,” Mr. Itzkowitz said, but paying for it can be “substantially riskier” depending on the type of school you attend or the credentials you seek.
(Another report found that former students of for-profit colleges tend to face greater financial risk than those who attended similarly selective public colleges. Those risks include taking on more debt for higher education, a greater likelihood of defaulting on student loans, and a lower likelihood of finding a job .)
Jason Altmire, president and CEO of Career Education Colleges and Universities, a trade group that represents for-profit career colleges, said it didn’t make sense to lump schools that offer mostly short-term certificate programs with colleges that offer four-year degrees. People who want to work in certain trades — hairdressing, for example — generally can’t work in the field unless they get a certificate, she said.
Mr. Altmire also said that income data from for-profit certificate schools may be skewed by “gender bias” because the programs had a higher proportion of women, who were more likely than men to work part-time while raising families, reducing the reports of a middle income school.
The HEA report also compared colleges’ performance to other benchmarks, such as the federal poverty line ($15,000 annual income for an individual), which is used to determine eligibility for benefits for government programs such as subsidized health insurance and Medicaid . Incomes at the “vast majority” of colleges exceeded that limit, according to the report, although 18 — nearly all for-profit schools that offer non-degree programs in beauty or hairdressing — had students with median incomes below that limit.
Majors also matter, as those in science, technology, engineering, and nursing typically lead to significantly higher salaries than arts or humanities majors. (Last year, the HEA published a separate analysis of the highest-paying college students.)
When comparing post-college earnings, students and families shouldn’t look at the data in a vacuum, said Kristina Dooley, a certified instructional designer in Hudson, Ohio. Many schools where former students go on to top earners have programs that focus on health sciences, technology, or business, but that may not be what you want to study.
“Use it as a single piece of information,” Ms. Dooley said.
He said students shouldn’t rule out a college just because it wasn’t at the top of the income list. However, ask questions — like whether the career services office helps set up internships and alumni connections to help you land a well-paying job.
Amy S. Jasper, an independent education consultant in Richmond, Va., said post-graduate income may matter more to students and families who had to take out loans for college. “How much debt do they want to take on?” he said. “That’s something to consider.”
But, he said, the benefits of college aren’t just financial. “I’d like to think that choosing the right school also means becoming a better person and contributing to the world.”
Here are some questions and answers about the cost of college:
Which colleges had the highest median incomes?
Marquee names like most Ivy League schools, Stanford and MIT are heavily represented at the top of the HEA analysis. Their students had an average income of at least $90,000 in the decade after they enrolled. (A handful of for-profit schools, focusing on careers like nursing and digital manufacturing, can also be found there.) But the highest-earning colleges on the list? Samuel Merritt University, a school of nursing and health sciences in Oakland, California, and the University of Health Sciences and Pharmacy in St. Louis, each with income of more than $129,000. You can view the data on the HEA website.
How much does college cost?
The average estimated “sticker” price for college—the published cost of tuition, fees, housing, meals, books and supplies, transportation, and personal items—ranges from about $19,000 a year at a two-year community college to about $28,000 for in-state students at a public four-year university to nearly $58,000 at a four-year private college, according to 2022-2023 data from the College Board. Some students, however, may pay much less because of financial aid.
Are certain college programs required to meet income benchmarks?
A federal “for-profit employment” rule that aims to make career programs more accountable is scheduled to take effect in July. The new rule, which mostly affects for-profit schools but also applies to certificate programs at all types of colleges, requires schools to demonstrate that at least half of their graduates earn more than a typical high school graduate in their state and that their graduates have affordable student loan payments. Colleges that miss any benchmark must notify students that the school may lose access to federal financial aid. Schools that fail the same standard twice in three years will become ineligible for federal aid programs.
