College graduates earn an average of $8,000 more per year than similar individuals who started but did not complete their degrees, even after accounting for student loan payments, according to research released Tuesday by the Brookings Institution.
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"Our research demonstrates that while student loans can limit the earnings premiums associated with postsecondary education, postsecondary education is, on average, still a worthwhile financial investment," wrote researchers Drs. Guangli Zhang, Jason Jabbari, Mathieu Despard, Xueying Mei, Yung Chun, and Stephen Roll.
The findings come as policymakers debate college affordability and student debt relief. The researchers matched degree completers with similar non-completers attending institutions in the same region and pursuing the same major using National Student Clearinghouse data, providing what they describe as the most direct measure of economic returns to degree completion.
The debt burden varies significantly by degree level. Associate degree holders spend only 9% of their earnings premium on loan payments, while bachelor's degree recipients dedicate 19%. Master's degree graduates face the steepest initial burden, allocating 57% of their additional earnings to debt repayment, though their faster salary growth allows them to close this gap more quickly over time.
Master's degrees yielded the highest average earnings and gross earnings premium, followed by bachelor's and associate's degrees, the study found. The research also showed suggestive evidence that completing undergraduate certificate programs increases debt-adjusted earnings by more than $5,000.
The report highlighted particular concerns for individuals who take on student debt but fail to complete their degrees, noting "significant negative impacts of non-degreed debt on the material and financial well-being of these doubly disadvantaged individuals."
In light of these findings, the researchers urged policymakers to maintain and potentially expand student loan opportunities, including for non-degree credential programs and graduate students. They also called for increased efforts to improve college affordability and persistence rates.
The study comes as Congress implement the One Big Beautiful Bill Act, which would institute borrowing caps on federal loans for graduate and professional degree programs and expand "gainful employment" rules that could eliminate federal student aid access for degree programs whose graduates fail to earn more than non-graduates' median earnings.
Under the proposed legislation, borrowers with federal student loans issued after July 1, 2026, would have only one income-driven repayment option: the Repayment Assistance Plan, which would require payments of 1% to 10% of monthly adjusted gross income over a 30-year period—10 years longer than some current repayment plans.
The researchers noted the need for greater transparency around postsecondary education costs and benefits to help students make informed decisions about their economic futures.
