Message to Students: Finish that College Degree!
Much has been made of the gap in outcomes between those with a bachelor’s degree or higher and those with a high school education or less. The unemployment rate among the former group is just 2.6 percent, compared to 5.4 percent for the latter group. Young adult bachelor’s degree holders can expect to earn $24,600 more per year than their counterparts with only a high school degree.
But what about the people in between? Often in economic statistics, these people are lumped into one category, labeled “some college.” But this grouping captures two separate groups of people: those who have completed a two-year associate’s degree, and those who have taken college classes but have not emerged with any credential at all. And recent evidence suggests that the fortunes of these two groups are diverging. Policymakers should look for ways to get students to complete their four-year degrees, or embark on associate’s degrees, which are easier to finish.
Educational attainment in America has been rising over the past fifteen years. According to my analysis of Current Population Survey data, 48 percent of young adults aged 26 to 30 now have an associate’s degree or higher, compared to 38 percent in 2000. This is generally good news: higher levels of education are associated with lower unemployment and higher earnings.
While the recession has taken its toll—the employment-population ratio among all young adults has fallen from 82 percent in 2000 to 76 percent today—not all educational groups have been equally affected.
In 2000, the employment rate for young adult associate’s degree holders (85 percent) barely differed from the rate for those who had started college but not received any degree (83 percent). Over the next fifteen years, however, the two groups diverged. By 2015, young adult employment fell less than four points for those with associate’s degrees (to 81 percent), but more than ten points among those with college experience but no degree (to 73 percent).
The divergence becomes clearer when we look at employment rates of different educational levels relative to those of bachelor’s degree holders. Currently, a gap of nine percentage points exists between the two groups. Statistically, individuals with some college but no degree now more closely resemble those with only a high school degree rather than the associate’s degree holders with whom they are normally categorized.
A comparable divergence exists for average earnings. Employed young adult associate’s degree holders earn roughly 72 percent of what their peers who hold bachelor’s degrees earn, roughly the same share as in 2000. (However, many associate’s degree holders, particularly in fields such as computer programming and dental hygiene, may earn more than the average bachelor’s degree holder.) However, for those with some college but no degree, this earnings ratio has fallen from 69 percent to 62 percent.
Who are the people with some college but no degree? According to a report by the National Student Clearinghouse Research Center, just 12 percent of individuals in this group have the potential to eventually earn an associate’s or bachelor’s degree. Among young adults in this group (ages 24-29), nine in ten have been out of college for two years or more.
Starting college, but not emerging with any sort of degree, can be a major source of hardship. For instance, students who do not graduate are four times more likely to be delinquent on student debt. According to the CPS data detailed above, this hardship has increased over time, especially with the recent recession. Individuals with some college but no degree have come to resemble those with no more than a high school degree more closely than they resemble those with an associate’s degree. In other words, attending college but not earning a degree may be little better than not attending at all—and possibly worse if it brings the burden of student debt.
Low graduation rates are a serious problem at American colleges. According to the National Center for Education Statistics, just 64 percent of enrollees in four-year colleges emerge with a degree, along with 35 percent of enrollees in two-year colleges. (These figures include those who transfer to other institutions.) Currently, colleges face few incentives to ensure their students graduate. Federal student aid programs, in fact, encourage students who may not be prepared to attend college.
The fortunes of college non-completers may pick up as the economy continues to gain steam. But policymakers should also look for ways to push up completion rates and increase the value of higher education.