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."
