Attention high school seniors and parents: If you’re picking a college, choose wisely. Or maybe rethink the traditional four-year college path all together.
Degree and college choice weigh heavily on a grad’s first paycheck, which often sets the pace for earnings potential throughout a career. However, a new report released Wednesday shows some two-year associate degrees can bring higher salaries than traditional four-year diplomas.
The study, “Higher Education Pays,” links wage data to a worker's alma mater and degree program and found that in Colorado, some associates degrees lead to higher first-year earnings than bachelors' degrees.
For example, an associate of applied science degree are designed to teach technical skills in high-demand in fields like health care, nursing and fire protection. The median first-year salary for people with these degrees in Colorado is $45,900, higher than the median salary for a bachelor’s degree holder, $38,860.
But, not all associate degrees in the state net this much upon completion. Associate of arts and science degrees are more general than their technical counterparts, and come with a smaller first-year median pay of $30,539.
First-year earnings also varied wildly for bachelor’s degree holders. For example, a bachelor’s degree from Colorado School of Mines, a competitive university focused on engineering and applied science, brings home a median wage of $56,671 in the first year. That’s a significant higher pay day from graduates at Adams State University, who earn about $32,539 during their first year out of school.
Choosing a Major, Setting the Tone
A student’s major also plays a major role in their earnings potential. The report shows a business degree from the University of Denver produces a median $59,567 first-year salary, much more than $32,300 for the school’s psychology degree (business majors earned more in their first year than psychology majors across the board).
Higher Education Pays is the fourth study that’s part of a project called “College Measures,” which has found similar results in Virginia, Arkansas and Tennessee. In all four states, researchers took wage data from unemployment insurance records of recent college graduates and broke them down by school, major and degree program.
Many education experts call the research an important step toward helping families determine the true value of a college degree.
“The two-year technical degree is a very valuable degree in the window that we are measuring,” says Mark Schneider of the American Institutes for Research, who heads up the project. “The liberal arts [degree], after two years, are not valuable. Technical degrees are much more valuable than liberal arts degrees, again, in the short run.”
However, this study comes with some caveats. It doesn’t include the college graduates who went on to graduate school, earn below the poverty line or moved out-of-state to work. Most importantly, it only measures the earning potential of each degree over one year. Over time, the results could be much different.
“We really need to know what happens to philosophy majors and fine arts majors 10-15 years out,” Schneider says. “The normal argument is that their skill sets, their cognitive skills, their ability to read, write, organize, argue, will grow over time and be recognized over time so that someone with a philosophy major 10 years out will be continuing to grow and to be rewarded in the labor market. While someone who has a technical degree and is working as a chemical technician, for example, 10 years later will be out of work because some robot will take that person’s job.”
Regardless of its limitations, education experts agree the study is an important step toward helping students and families decide how much a degree is worth and how much debt they should take on to get one. Total student debt has skyrocketed in recent years, and now sits near $1 trillion, higher than credit card or auto loan debt. Consumers are struggling to pay back their student loans, which average $26,000 per graduate upon graduation. More than 11% of total student loans are delinquent by more than 90 days, according to a recent report by the Federal Reserve Bank of New York.
“For most college students, the information that they have about college is largely in a black box,” explains Amy Laitinen, deputy director for Higher Education at New America Foundation. “They know what the football team is, they know what the dorms are like, but they don’t necessarily know what the likelihood is that they're going to graduate, that they're going to graduate on time, that they're going to graduate with a lot of debt, and what their earnings are going to be on the other side.”
Schneider also plans to release data from Florida, Nevada and Texas. Right now, there is no national database with similar figures, but Both Democrats and Republicans in Congress have supported making more information like this available for prospective college students.