Earning an associate’s degree raises career-long earnings by $259,000, concludes a new study, What’s the Value of an Associate’s Degree? The Return on Investment for Graduates and Taxpayers. “Even after factoring in the costs that graduates incur when earning the degree, the associate’s degree is a good investment,” wrote authors Jorge Klor de Alva, president of Nexus Research and Policy Center, and Mark Schneider, president of College Measures and an AIR Fellow and vice president.
Among the top 20 percent of institutions with graduates enjoying the highest return on investment (ROI), California and Texas had the most high-ROI colleges.
Located in the heart of Silicon Valley, Foothill College graduates earn $745,000 more than the state’s high school graduates over a 40-year career, the study estimated. Two other community colleges in the area — Ohlone Community College with $740,292 and Evergreen Valley College with $705,787 provided a very strong ROI.
However, colleges’ ROI varies greatly, the study found.
California has five schools whose graduates earn less than the median earnings of those with only a high school degree: Oxnard College, with $90,166 less; Mendocino College, $71,503 less; Reedley College, $60,554 less; Los Angeles Mission College, $28,345 less, and Cuesta College, $18,284.
Thirty states have at least one community college with graduates whose median net financial return over a 40-year work-life falls below the lifetime earnings of in-state high school graduates.
Returns were especially low in Missouri and Montana.
As graduates earn more, they pay more in taxes. The average gain in additional tax revenue is $67,000.
Klor de Alva and Schneider concluded that community colleges, states, and the nation should: reward progression, retention, and completion through performance funding formulas; distribute resources carefully to promote success; emphasize technical training and close ties between schools and their local labor market; and collect better data, at the student and program levels, and make the data publicly available.
Students who earned certificates weren’t included in the study, even though “some certificates permit students to earn starting salaries that are higher than those earned by associate’s or even bachelor’s degree holders.” Little data is available on certificates’ value, the authors wrote.