Unveiling the Value of a College Degree: Statistics and Insights

A college education is widely recognized as a path to higher income and greater economic well-being. The evidence that a college degree significantly improves one’s employment prospects and earnings potential is overwhelming. But now that you’re grown up and it’s time to start looking at which university or college you’ll attend after graduation, you realize that higher education can be very expensive. So, you could be forgiven for wondering if you really need a college degree. Well, stop wondering! It turns out that earning a college degree really, truly does pay off.

Earnings and Employment: The Clear Advantage

College-educated workers enjoy a substantial earnings premium. On an annual basis, median earnings for bachelor’s degree holders are $40,500 or 86 percent higher than those whose highest degree is a high school diploma. The earnings gap between college graduates and those with less education continues to widen. In 2023, median income for recent graduates reached $60,000 a year for bachelor’s degree holders aged 22-27.

For 25- to 34-year-olds who worked full time, year round, those who had higher educational attainment also had higher median earnings in 2022. For example, in 2022, the median earnings of those with a master’s or higher degree ($80,200) were 20 percent higher than the earnings of those with a bachelor’s degree ($66,600) as their highest level of attainment. This indicator examines the annual earnings of 25- to 34-year-olds who worked full time, year round (i.e., worked 35 or more hours per week for 50 or more weeks per year). Many people in this age group recently exited formal education. They may be entering the workforce for the first time or transitioning from part-time to full-time work. In 2022, some 76 percent of 25- to 34-year-olds in the labor force worked full time, year round. This percentage was generally higher for those with higher levels of educational attainment. For example, 80 percent of labor force participants in this age group who had a bachelor’s degree as their highest level of educational attainment worked full time, year round in 2022, compared with 73 percent of those who completed high school as their highest level of educational attainment.

Recent college graduates also weathered the Great Recession far better than their peers with a high school diploma. Today, the jobless rate for bachelor’s degree holders is less than 3 percent. And the incidence of poverty among bachelor’s degree holders is 3.5 times lower than it is for those who hold high school degrees.

Stability and Economic Security

A degree is also connected to having a more stable career in general. Additionally, these full-time jobs can come with oft-vital benefits like health insurance, vacation, retirement, and more.

Beyond wages, the job market favors college graduates in other ways as well. Graduates are more likely to participate in the labor force, less likely to be unemployed, and more likely to have full-time jobs. Among full-time workers, college graduates are more likely to have jobs that offer paid vacation, health insurance, retirement, and flexible work arrangements.

The long-term view is critical. College graduates not only earn higher wages and have higher-quality jobs, they are also better protected during economic downturns. In the past several recessions, less-educated workers have borne the brunt of employment losses.

Trends and Changes Over Time

Prior to the coronavirus pandemic, the percentage of 25- to 34-year-olds in the labor force who worked full time, year round had been increasing at all levels of educational attainment. These trends were disrupted during the pandemic. From 2019 to 2020, full-time, year round employment rates fell for 25- to 34-year-olds at all educational attainment levels except those with a master’s or higher degree (for whom the rate was not measurably different). By 2022, full-time, year round employment rates had rebounded, and there was no measurable difference at any attainment level compared with 2019. Full-time, year round employment was also higher in 2022 than in 2020 for those with a master’s or higher degree.

Median earnings increased between 2012 and 2022 at some but not all educational attainment levels for 25- to 34-year-olds who worked full time, year round. However, the median earnings were not measurably different in 2022 than in 2012 for those with some college but no degree, those with an associate’s degree, or those with a master’s or higher degree. Because the earnings of 25- to 34-year-olds increased at some but not all educational attainment levels, the gaps in median earnings between some attainment levels changed. For example, the gap in median earnings (in constant 2022 dollars) between high school completers and those who did not complete high school was narrower in 2022 ($6,300) than in 2012 ($9,900), with high school completers earning more in both years. In contrast, the gap in median earnings between those with a bachelor’s degree and those with an associate’s degree was wider in 2022 ($17,100) than in 2012 ($13,400), with bachelor’s degree completers earning more in both years.

Beyond the Paycheck: Broader Benefits

Of course, a college education is about more than just securing a job and a steady income. Consider health and safety, prerequisites for leading a fulfilling life. Bachelor’s degree holders are 47 percent more likely to have health insurance provided through their job and their employers contribute 74 percent more to their health coverage. Life expectancy is also longer for those who attend college. Reports have shown that degree holders have higher rates of both physical and mental health.

The Gender and Racial Wage Gap

The pattern of those with higher educational attainment having higher median earnings held, in general, for both male and female 25- to 34-year-olds who worked full time, year round in 2022. However, the median earnings of males were higher than the median earnings of their female peers at all levels of educational attainment. For example, the median earnings of males with a bachelor’s degree ($75,100) were 23 percent higher than those of their female peers ($60,800). The median earnings of males who completed high school ($46,400) were 26 percent higher than those of their female peers ($36,700).

In general, the median earnings of Asian and White 25- to 34-year-olds who worked full time, year round exceeded the corresponding median earnings of their Black and Hispanic peers at most educational attainment levels in 2022. Although workers across gender and racial/ethnic groups see a wage premium for earning a college degree, marked disparities still exist in the labor market. Male workers with a bachelor’s degree have a median annual wage of $100,000, compared with $80,000 for college-educated female workers; the gender gap is similar across education levels.

The Rising Cost of College

Students who want to reap the benefits of college face rising costs. After adjusting for inflation, average costs have increased by 37 percent across the state’s four-year and public two-year institutions over the last 20 years. In 2023-24, a nonprofit private college in California cost full-time undergraduates living off campus an average of $75,000 per year, including tuition, room and board, books, and other fees. Housing-not tuition-is the key driver of rising costs at public colleges. After accounting for inflation, public four-year tuition is actually lower now than it was five years ago thanks to increases in state funding, though future tuition increases may reverse this trend.

Financial Aid and Student Loans

Many students save significantly by living with family, especially at CCC (nearly two-thirds of aid recipients live with family) and CSU (half do so). Financial aid in California is very generous and can reduce costs tremendously, especially for students from low-income families. A CSU student whose family earns less than $30,000 pays on average $6,200 in annual college costs, compared to $20,500 for a student whose family income exceeds $110,000. Financial aid fully covers tuition for many students, especially those attending public colleges. But nontuition costs remain high.

An estimated 30 percent of California students at four-year universities took out student loans in 2022-23, lower than the national rate of 43 percent. Overall, public college students are less likely to take out federal, institutional, or private loans. About a quarter of CSU and UC students did so in 2022-23, compared to 43 percent of students at four-year nonprofit private colleges and almost two-thirds at four-year for-profit colleges. Students from for-profit colleges-disproportionately Black and Latino students-are the most likely to have loans that are delinquent or in default. Notably, the majority of students at for-profit colleges never graduate, and those who do have lower wages than other graduates.

Read also: Affordable Business Education

The Importance of Completion

Students who never finish their degree do not see the same wage bump as college graduates. This financial loss is compounded for those who took out loans to attend college in the first place. Three years after college, 22 percent of non-graduates have loans that are in default or delinquent, compared to 12 percent of graduates.

Varying Value by Major

The wage benefits of a college degree differ considerably across majors. Graduates in engineering and computer science earn a median wage of $120,000 annually, almost double what graduates in education make ($68,000).

Public Perception and Partisan Views

adults say it’s extremely or very important to have a four-year college degree in order to get a well-paying job in today’s economy. Only 22% say the cost of getting a four-year college degree today is worth it even if someone has to take out loans. Some 47% say the cost is worth it only if someone doesn’t have to take out loans. These findings come amid rising tuition costs and mounting student debt.

Views on the cost of college differ by Americans’ level of education. Four-year college graduates (58%) are much more likely than those without a college degree (26%) to say their education was extremely or very useful in giving them the skills and knowledge they needed to get a well-paying job. Views on the importance of college differ widely by partisanship. It’s not too or not at all important to have a four-year college degree in order to get a well-paying job (50% of Republicans vs. A college degree is less important now than it was 20 years ago (57% vs. It’s extremely or very likely someone without a four-year college degree can get a well-paying job (42% vs.

Community College vs. Four-Year University

Some students decide to start off attending a two-year community college to save some money, with the intention of transferring to a four-year university. But this strategy might not be the best idea - or the best value. Not only do students who begin their education at a four-year institution have higher graduation rates, they also have more resources and an improved student life. Four-year universities offer more “bang for your buck,” with competitive sports teams, a variety of student clubs, a broader choice of degrees, and residential opportunities. Most students find that it’s easier to make friends and participate in student life at a four-year university.

The Bigger Picture: Societal Impact

Workers who earn a four-year degree can lift wages for other workers. Over a lifetime, the average bachelor’s degree holder will contribute $278,000 more into their local economy than workers with only a high school diploma.

Higher education is a critical driver of economic progress. It is also the key policy lever for improving mobility from one generation to the next, especially for low-income, first-generation, Black, and Latino students. In addition to having higher earnings and better job benefits, college graduates are more likely to own a home and less likely to be in poverty or need social services.

Improving Access and Completion

Although the state has made enormous progress, more work is also needed to improve student success at key transition points, including high school graduation, college enrollment, transfer, and college completion. If current enrollment and completion rates continue, most California 9th graders will not earn a bachelor’s degree. And at every step along the way, low-income students-who account for more than half of the state’s public K-12 students-are less likely than their higher-income peers to make it to and through college. California and its higher education systems have already made tremendous strides in expanding access and improving completion so that more students can enjoy the benefits of a college degree.

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