A recent study reports that in Texas, "On average, a year after graduation, students with two-year technical degrees have first-year median earnings of more than $50,000, just over $11,000 more than graduates of bachelor's degree programs across the state." The findings from College Measures, a partnership between American Institutes for Research and Matrix Knowledge Group, list that other states repeat similar patterns, with earnings of those with technical degrees coming in extremely comparable if not beating those with bachelor's degrees, even with a shorter program duration.
What should we tell soon-to-be high school graduates to do now? Even with this new data, the answer remains complex.
College Measures findings
An essay from higher-education expert Jeffrey Selingo published in The Wall Street Journal summarized many of College Measures findings:
In Tennessee, the average first-year salaries of graduates with a two-year degree are $1,000 higher than those with a bachelor's degree. Technical degree holders from the state's community colleges often earn more their first year out than those who studied the same field at a four-year university. ...
In Virginia, graduates with technical degrees from community colleges make $20,000 more in the first year after college than do graduates in several fields who get bachelor's degrees.
While eye-opening, College Measures has limited data to study. This data includes only first-year wage information from students who remained in-state to work. It leaves out potential future earnings of higher degrees in subsequent years, as well as earnings from those who left the state to take a job. Comparing the earnings of a technical school graduate with a four-year art history degree also can skew the data in favor of an associate's degree. College Measures data does reinforce the significance for earnings from highly employable degrees.
Those who are unemployed are not factored into College Measures wage data. But College Measures does include the percentage of graduates whom they have wage information on for each college. To take one example from the Wall Street Journal article, while Dyerson State Community College graduates earn $5,300 more in their first year after completion compared with those from the University of Tennessee at Knoxville, the data has wage information for only 43% of Dyerson graduates with an associate's degree and 29% of Tennessee graduates.
So those wondering what path to take after high school must also look at the chances of snagging a job. There's an obvious benefit for any higher education after high school, but the biggest jump in improved chances of employment comes with a bachelor's degree:
While some two-year programs could offer a higher wage, four-year programs offer the largest advantage in finding work.
Another factor to take into account is weighing the extra two years of college costs versus an extra two years of wages. According to College Reality Check, the net price for a bachelor's degree at Bridgepoint Education's (NYSE:BPI) Ashford University is about $17,300, only about $1,000 less than the cost of Harvard. An Ashford graduate can expect to earn $36,400 annually in his or her early career, about $14,000 less than a Harvard grad.
While Harvard's earning power can make up for the extra years of paying tuition, it's obviously not a school for everyone, with its difficulty of admission. When comparing Ashford with Western Iowa Tech Community College, with an associate's degree costing about $5,100 yet with a graduate expecting to earn $32,200, the cheaper cost of a degree with a few extra years of slightly lower earnings can create a difficult choice.
|School||Net Price||Average Income (Early in Career)||Graduation Rate|
|Western Iowa Tech||$5,085||$32,200||16.1% (in 2 years)|
In addition, graduation rates should also be reviewed. College Reality Check reports that only 13.2% of Ashford University students graduate in four years. Only 16% of Western Iowa Tech students graduate in two years. Many for-profit colleges, such as Ashford, have similar graduation rates below the national average. At Apollo Group's (NASDAQ:APOL) University of Phoenix, at its Phoenix campus, only 2.6% of students graduated within four years, according to information gathered by the Chronicle of Higher Education. In the University of Phoenix's online program, just 0.7% graduated within four years.
Weighing the factors
College Measures' findings demonstrate that with college costs at all-time highs, a true cost-benefit analysis needs to be done on a high school graduate's options. The right four-year college, such as Harvard, can offer a superb education with little debt and employment even with an art history major, whereas the wrong one can leave you without a degree but saddled with loan payments.