Adults with four-year college degrees earn far more than those with high school degrees or less education. Even without a four-year degree, postsecondary credentials can significantly elevate adults’ economic position. As a result, postsecondary education is a strong facilitator of social mobility (Baum, Ma, and Payea 2013; Haveman and Smeeding 2006) and a protective factor against downward mobility (Urahn et al. 2012).
Evidence of the Relationship between Predictor and Related Outcomes
- Postsecondary education, particularly the achievement of a bachelor’s degree, significantly raises worker earnings. Ma, Pender, and Welch (2019) find that median annual earnings for people with a bachelors’ degree are about $24,900 higher than those with only a high school degree. Further, they show that by age 33, these increases in earnings make up for both the four-year absence from the workforce as well as student loans to cover tuition and fees (Ma, Pender, and Welch 2019). The earnings advantage for college graduates has increased over the past decade (Baum, Ma, and Payea 2018; Ma, Pender, and Welch 2019).
- Earnings for people who obtain a two-year associate’s degree at a community college or even who attend college but do not earn a degree are still higher than earnings for those with only a high school diploma (Ma, Pender, and Welch 2019). Associate degree recipients can earn enough money by age 31 to offset the costs of college attendance and absence from the workforce; those who attend college but do not complete a degree earn enough to offset the costs of attendance by age 36 (Ma, Pender, and Welch 2019). But research also shows that earnings for holders of associate’s degrees vary much more widely by major than earnings for holders of bachelor’s degrees (Holzer and Baum 2017). Earnings tend to be higher for those who hold an associate of science than for those who hold an associate of arts (Holzer and Baum 2017).
- Fifty-seven percent of people with a college degree are wealthier than their parents. In contrast, only about 46 percent of those without a degree surpass their parents’ wealth (Urahn et al. 2012).
- Unemployment rates for people with a bachelor’s degree are usually about half the rate for those without (Ma, Pender, and Welch 2019).
- Although attending college boosts earnings, on average, for all people, regardless of race, ethnicity, or gender, the extent of this benefit varies across subgroups (Ma, Pender, and Welch 2019). The payoff for college attendance is higher for both Asian men and women than for any other race or gender group (Ma, Pender, and Welch 2019). Though Black people tend to earn less than white and Asian people across education levels, the earning gains from an associate’s degree compared with the gains from a high school diploma were higher for Black men than for those in other population subgroups (Ma, Pender, and Welch 2019). Black students tend to borrow more than other students, which may mean it takes them longer to realize positive returns on their education (Baum and Washington 2020).
- Research shows that 31 percent of individuals with a college degree from families in the middle income quintile became top-income-quintile earners as adults (Baum, Ma, and Payea 2013). Conversely, only 12 percent of nongraduates from middle-income families moved into the top income quintile (Baum, Ma, and Payea 2013).
- Postsecondary education can support mobility in particular for families with the lowest incomes (Baum, Ma, and Payea 2013; Urahn et al. 2012). Of four-year college graduates whose parents were bottom-quintile earners, 90 percent moved into a higher income bracket (Baum, Ma, and Payea 2013). Over half (53 percent) with a four-year college degree moved from the bottom family-income quintile into at least the middle quintile or higher, with 10 percent achieving the top income quintile (Baum, Ma, and Payea 2013). Comparatively, 47 percent of those who did not graduate college remained in the bottom quintile later in life (Baum, Ma, and Payea 2013).
How Investments Can Influence the Predictor at State or Local Levels
Many strategies exist to increase access to and completion of postsecondary education, especially for low-income students. Locally, community colleges could offer increased academic and career counseling to enable students to make more informed choices about their courses, degree, and career pathways (Baum and Holzer 2017). Because community college resources and programs vary widely, schools that lack student supports or programs with high earnings potential can benefit from resources to expand these offerings (Baum and Holzer 2017; Baime and Baum 2016). Across all institution types and starting in high school, students interested in attending college can be offered more guidance on what level and type of financial borrowing or aid is appropriate for them (Baum and Washington 2020). Further, online and hybrid learning for community colleges has been on the rise, so continuing to expand digital access and skills to reach more students needing flexible education options can improve access to those more flexible options (Levy 2017).
Regarding institutional funding from all sources, Haveman and Smeeding (2006) emphasize the need to shift public education funding away from wealthy private schools toward both public universities as well as individuals, particularly those from low-income backgrounds. Espinosa, Kelchen, and Talyor (2018) recommend greater public and private investment in minority-serving institutions, such as historically Black colleges and universities and Hispanic-serving institutions, given their limited resources and strong record of facilitating upward mobility among their graduates.
The primary reference is marked with an asterisk.
Baime, David, and Sandy Baum. 2016. Community Colleges: Multiple Missions, Diverse Student Bodies, and a Range of Policy Solutions. Washington DC: Urban Institute.
*Baum, Sandy, Jennifer Ma, and Kathleen Payea. 2013. Education Pays: The Benefits of Higher Education for Individuals and Society. New York: College Board.
Baum, Sandy, and Harry Holzer. 2017. “Do Too Many Community College Students Major in Liberal Arts?” Urban Wire (blog), August 31.
Baum, Sandy, and Kelia Washington. 2020. Borrowing for College: Helping High School Students Make Good Decisions. Washington, DC: Urban Institute.
Espinosa, Lorelle L., Robert Kelchen, and Morgan Taylor. 2018. Minority Serving Institutions as Engines of Upward Mobility. Washington, DC: American Council on Education.
Haveman, Robert, and Timothy M. Smeeding. 2006. “The Role of Higher Education in Social Mobility.” Future of Children 16 (1): 1–26.
Holzer, Harry, and Sandy Baum. 2016. “Making College Work: Pathways to Success for Disadvantaged Students.” Washington, DC: Brookings Institution Press.
Levy, Dawn, 2017. “Online, Blended and Technology-Enhanced Learning: Tools to Facilitate Community College Student Success in the Digitally-Driven Workplace.” Contemporary Issues in Education Research 10 (4): 255–62.
Ma, Jennifer, Matea Pender, and Meredith Welch. 2019. Education Pays: The Benefits of Higher Education for Individuals and Society. New York: College Board.
Urahn, Susan K., Erin Currier, Diana Elliott, Lauren Wechsler, Denise Wilson, and Daniel Colbert. 2012. Pursuing the American Dream: Economic Mobility across Generations. Washington, DC: Pew Charitable Trusts.