Inside IES Research

Notes from NCER & NCSER

What Are the Payoffs to College Degrees, Credentials, and Credits?

The Center for Analysis of Postsecondary Education and Employment (CAPSEE) is an IES-funded Research and Development Center that seeks to advance knowledge regarding the link between postsecondary education and the labor market. CAPSEE was funded through a 2011 grant from the National Center for Education Research (NCER) and is in the process of completing its work. CAPSEE will hold a final conference to discuss its findings on April 6 & 7 in Washington, DC.

Recently, Tom Bailey (pictured), Director of the Community College Research Center, Columbia University, Teachers College, and the Principal Investigator for CAPSEE, answered questions from James Benson, the NCER Program Officer for the R & D center.

Can you describe some of the original goals of CAPSEE?

We were especially interested in the economic benefits of a college education for community college students, including those who complete awards (Associate’s degrees or certificates) and those who do not, as well as those who transfer to four-year colleges. We were also interested in differences in earnings by field of study. When we started CAPSEE in 2012 there were a lot of studies that used survey datasets to look, in general, at the returns to completing a Bachelor’s degree. The CAPSEE approach was to use large-scale statewide databases and follow college students over time, to look in detail at their earnings before, during, and after college.

In addition, CAPSEE researchers sought to examine two key policy issues. One was how financial aid and working while enrolled affect students’ performance in college and their labor market outcomes. The other was whether for-profit colleges help students get better jobs.

You have synthesized findings from analyses in six states. What are your main findings?

We found that, in general, Associate’s degrees have good returns in the labor market; they’re a good investment for the individual and for society. However, there is quite a bit of variation in returns by program. For students in Associate degree programs primarily designed to prepare them for transfer to a four-year college, if they don’t transfer, their degrees will not be worth very much. But when they complete vocational degrees, especially in health-related fields, the earnings gains are usually strong and persistent (and robust to how we estimated them). Also, we did a lot of research on certificates, credentials that many see as the best fit for students on the margin of going to college. We found benefits to students who completed certificates, again especially in fields that directly relate to an occupation or industry. And finally, we examined outcomes for students who enrolled and took courses without attaining a degree or certificate. We found that their after-college earnings increased in proportion to the number of credits they earned.

"The fundamental policy implication is that college is a good investment."

What do you see as the key policy implications of these findings?

The fundamental policy implication is that college is a good investment. This merits emphasis because there are repeated critiques of college in terms of how much it costs and how much debt students accumulate. That said policymakers do need to think about the value of each postsecondary program. Even within the same institution, programs have very different outcomes. Yet on average, attending college for longer and attaining more credits has beneficial effects. Policymakers should see this evidence as supporting public and private investments in college.

What did you discover about the relationships between financial aid, college outcomes, and labor market outcomes?

In an era of tight public resources, the effectiveness of financial aid policy is a crucial issue. Financial aid does help students persist in college, but one way to promote greater effectiveness is through academic performance standards for students receiving federal financial aid. These have existed in the federal need-based aid programs for nearly 40 years, in the form of Satisfactory Academic Progress (SAP) requirements. These have not received much attention. Our research on SAP suggests such policies have heterogeneous effects on students in the short term: they increase the likelihood that some students will drop out, but appear to motivate higher grades for students who remain enrolled. After three years, however, the negative effects dominate. Though it has little benefit for students in the long term, SAP policy appears to increase the efficiency of aid expenditures because it discourages students who have lower-than-average course completion rates from persisting. But the policy also appears to exacerbate inequality in higher education by pushing out low-performing, low-income students faster than their equally low-performing, higher-income peers.

Many students work while in college.  Does this seem to help or hurt students in the long run?

Our research found that for Federal Work-Study (FWS) participants who would have worked even in the absence of the program, FWS reduces hours worked and improves academic outcomes but has little effect on post-college employment outcomes. For students who would not have worked, the effects are reversed: the program has little effect on graduation, but a positive effect on post-college employment.  Results are more positive for participants at public institutions, who tend to be lower income than participants at private institutions. Our findings suggest that better targeting to low-income and lower-scoring students could improve FWS outcomes. This is consistent with much of the CAPSEE research—you need more detail and specificity to really understand the relationship between education and employment and earnings.

What did you learn about credentials from for-profit institutions?

Our findings on students at for-profit colleges were quite pessimistic. Although enrollment in for-profit colleges grew significantly after 2000, the sector has been declining during the last two years, as evidence on inferior outcomes – particularly with regard to student debt – emerged. In general, our researchers found that for-profit students have worse labor market outcomes than comparable community college students although in some cases the difference is not statistically significant. Our evidence suggests that these colleges need to be monitored to ensure they are delivering a high-quality, efficient education.

You are holding the final CAPSEE conference in April. What do you hope people will get out of it?

At the conference, we will focus on several important and controversial policy questions related to higher education: 

  • Have changes in tuition and the labor market created conditions in which college is not worth it for some students, contributing to an unsupportable increase in student debt? 
  • Has higher education contributed to inequality rather than promoting economic mobility? 
  • Is continued public funding of college a worthwhile investment? 
  • Should public funding be used only for some programs of study?  
  • What are the arguments for and against making community college free?
  • Can changes in the operations and functioning of colleges change the return on investment from a college education for both the individual and society?
  • How important should information on earnings outcomes be for accreditation decisions and/or for eligibility of students to receive financial aid? 

At the conference participants will have the opportunity to discuss and learn about these issues drawing on five years of CAPSEE research as well as input from other experts.

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