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|This article was originally published as the Executive Summary of the Statistical Analysis Report of the same name. The sample survey data are from the NCES High School and Beyond Longitudinal Study (HS&B).|
While the advantages of earning a postsecondary education degreeparticularly a bachelors degreeare well documented, the literature is less conclusive about the economic and social impact of postsecondary education credits apart from degree completion. Different conclusions about the economic returns to a college education reflect different populations and time periods of analysis, with variations in how a students background, education, and labor force experience were defined and measured.
Although there is in general a pronounced earnings differential for those with and without a bachelors degree, not all non-college-bound students or students with some college but no credential fare poorly in the labor market or fail to acquire highly marketable skills.
Clarifying the economic outcomes for those with a high school education but no college, and those with some college but no degree, and understanding the relationship of factors that potentially affect individual earnings may help to clarify the alternatives and risks of either not pursuing a postsecondary education or completing some college credits in lieu of a degree. In turn, this information can help guide the strategies and investment decisions of students, educators, and employers.
This analysis examines 16 student characteristics and their association with earnings 10 years after high school. To facilitate the analysis, these characteristics are organized around four broad aspects of experience and background (referred to as the earnings framework) as shown in figure 1.
The analysis is based on data from the High School and Beyond Longitudinal Study of 1980 Sophomores, including the Fourth Follow-up (HS&B-So:80/92) and the Post-secondary Education Transcript Study (HS&B-So:PETS). While the analysis examines the earnings of young adults at all levels of attainment, students with some college credits but no degree are the focal point. To put the experiences of these students into perspective, this group is compared throughout with those 1980 sophomores whose formal education ended with high school graduation in 1982, as well as with those who completed a vocational certificate, associates or bachelors degree, or higher degree.
As of 1992, just under 63 percent of all students from the sophomore class of 1980 had at least some college, and 42 percent (about two-thirds of those who attended college) had completed a program leading to a degree or certificate. In other words, about one in five students (22 percent) from this cohort attended college but did not complete a program leading to a degree or certificate.
Students with some college were almost evenly divided into those who completed 15 or fewer college credits, those who completed 16 to 40 credits, and those with more than 40 credits. Students with some college who fall into these three categories of attainment varied not only with respect to credit production, but across a range of other characteristics as well. In broad terms, as discussed in this report, students with some college, particularly those who completed more than 40 credits, were most similar to students with a bachelors degree, while students who completed 16 to 40 credits were closer in profile to those with an associates degree. In contrast, students who completed 15 or fewer credits resembled those with no college in some instances and those with an associates degree or vocational certificate in others.
Student attainment was closely related to several aspects of social-demographic background, including race, gender, family income, and parent attainment. Females, for example, were more likely than males to attend college, while Black, Hispanic, and American Indian students were less likely than either White or Asian/Pacific Islander students to attend college or complete a bachelors degree. In addition, students with a 1980 family income of $40,000 and above were more than three times as likely to have completed a bachelors degree and more than four times as likely to have completed a graduate degree as students with a family income under $15,000. Similarly, students with a bachelors degree were more than twice as likely to have come from families where one or both parents completed a bachelors degree, while those with only a high school diploma were more than six times as likely to have come from a family where neither parent attended college.
After controlling for academic and labor force experiences and background characteristics, a bachelors or associates degree was shown to contribute significantly to earnings, and the results were generally consistent with what others have estimated.1 Based on the ratio of adjusted mean earningswhich take into account the covariance of other confounding factorsstudents with a bachelors degree, on average, earned about 23 percent more than students with no college. For students with an associates degree, there was about a 9 percent earnings differential compared with high school graduates. For students with some college, there appeared to be about a 6 to 9 percent mean earnings differential over those with no college (depending on the number of credits completed), but there was not enough statistical evidence to draw this conclusion. In other words, after controlling for multiple aspects of student experience and background, the economic returns of some college credits apart from degree completion were negligibleirrespective of the number of credits completed. The lack of a return for students with some college (but no degree), who in particular completed more than 40 credits, suggests that credit production in the absence of a meaningful integration of courses contributes little to individual earnings and/or that there are considerable economic gains that can be attributed to the degree credential itself.
While students with some college, on average, showed the same level of earnings as students with no college, there were numerous instances in which specific aspects of a postsecondary education experience were associated with higher earnings. These include students whose coursework was vocationally (as opposed to general education) focused; students with undergraduate majors in computer science, health technology, business, and engineering; students who achieved a balance of breadth versus depth of study in their curriculum; and students who attained a cumulative GPA of 3.0 or higher. Differences in earnings were also observed by type of institution first attended, with students who attended private not-for-profit 4-year institutions having higher earnings than those who attended public 2-year institutions. In contrast, there was no difference in earnings for students who attended public 4-year institutions compared with those who attended public 2-year institutions, controlling for other factors.
In broader terms, the earnings gain associated with these various characteristics suggests that postsecondary education curriculum and academic performance, along with other aspects of the postsecondary education experience, may figure prominently in the economic returns to a postsecondary education.
Apart from attainment and selected aspects of the college experience, the findings from this analysis suggest that labor force experience constitutes an important component of the earnings equation. Based on the findings of the multiple regression analysis, workforce experience during high school and during the 4 years immediately following high school can contribute significantly to individual earnings. While this association potentially reflects differences in motivation as well as experience, the findings nonetheless suggest that an enriching early work experience may provide students with an important channel for such motivation, and in effect mitigate some of the economic disadvantages of not having a college degree.
As with questions concerning college access, however, higher rates of unemployment and lower levels of work experience during and in the first 4 years after high school suggest that some students, such as Black and American Indian students (who are less likely to complete college), may have less access to enriching early employment opportunities as well.
In broader terms, the associations between educational attainment, early employment, and earnings suggest that the greatest gains in individual earnings are most likely to accrue through a combination of work and postsecondary education. And, while the responsibilities of employment may compete with educational activities, work experiences in some instances can be mutually facilitating and mutually reinforcing.
The last set of observations concerns the influences of socioeconomic background and economic mobility. In combination, several elements of students background, including family income and high school academic preparation, were associated with earnings both directly and indirectly through an association with higher attainment.
While the findings from this analysis reaffirm the central role of education (at both the high school and post-secondary levels) as a vehicle of social mobility, in actuality, for the sophomore class of 1980, the earnings distribution of students 10 years after high school remains closely associated with socioeconomic status during high school. In other words, while education is positively related to individual earningsirrespective of socioeconomic backgroundthe direct and indirect effects of family income still constitute a dominant factor in the formation of an individuals earning capacity.
Nowhere is this impact more clearly illustrated than with the racial/ethnic background of students. After controlling for all other characteristics in the earnings framework, there was no difference in student earnings by race/ethnicity. While at one level this finding suggests that something of an economic parity with respect to race/ethnicity exists in the labor market, it is crucial to recognize the extent to which this balance is offset by the overall disparity in attainment for Blacks, Hispanics, and American Indians compared with Whites or Asians/Pacific Islanders.2
While observed differences in earnings by race/ethnicity are more directly attributable to differences in attainment than to other factors, the same cannot be said with respect to gender. Indeed, for the sophomore class of 1980, females were more likely to attend college than males and had equivalent bachelors and advanced degree rates of attainment. At the same time, after controlling for all factors in the model, there remains a pronounced earnings differential by gender, with an adjusted mean earnings for females that is approximately 18 percent less than for males.
While this disparity may in part be accounted for by differences in occupational employmentwhich was not considered in the earnings frameworkthis finding nonetheless brings with it a number of implications, including questions about comparative differences in a college educations economic return on investment and in the level of college debt that students may ultimately be able to assume. At the same time, the positive association between attainment and earnings remains, regardless of gender. Therefore, while economic parity, by definition, cannot be achieved through offsets in attainment for those who are otherwise disadvantaged, attainment nonetheless serves to mitigate those disparities.
1See, for example, Kane and Rouse (1993).
2For the sophomore class of 1980, Blacks, Hispanics, and American Indians were less than half as likely as White students and less than one-third as likely as Asians/Pacific Islanders to attain a bachelors degree.
Kane, T.J., and Rouse, C.E. (1993). Labor Market Returns to Two- and Four-Year College: Is a Credit Really a Credit and Do Degrees Matter? Cambridge, MA, and Princeton, NJ: Harvard University and Princeton University.