Is College Worth It? (2024)

Beyond wage gains, the job market favors college graduates in other ways as well. Graduates are more likely to participate in the labor force, less likely to be unemployed, and more likely to have full-time jobs. Among full-time workers, college graduates are more likely to have jobs that offer paid vacation, health insurance, retirement, and flexible work arrangements. These forms of non-wage compensation help provide greater financial stability and security over the long run.

College graduates not only earn higher wages and have higher-quality jobs, but they are also better protected during economic downturns. In the past several recessions, less-educated workers have borne the brunt of employment losses. During the worst of the COVID-19 recession, the unemployment rate for those with no college experience was 18 percent, compared to 10 percent for those with a bachelor’s degree.

Financial aid can reduce costs tremendously, especially for students from low-income families. A CSU student whose family earns less than $30,000 pays $4,700, on average, in annual college costs, compared to over $18,000 for a student whose family income exceeds $110,000. Unfortunately, financial aid is underused: only about half of California high school seniors apply for aid, leaving an estimated $560 million in annual federal grants on the table. A new state policy will require more high school graduates to apply for financial aid, which could improve college access.

An estimated 47 percent of California graduates from public and private nonprofit colleges have student debt (lower than the national rate of 62%). Overall, public college students are less likely to take out federal, institutional, or private loans. About three in ten CSU and UC students took out such loans in 2019. In contrast, 45 percent of students at nonprofit private colleges take out loans, and nearly seven in ten students at for-profit colleges do so. Federal loan amounts are also smaller at public colleges.

Students from for-profit colleges struggle the most paying back their loans. Most students at for-profit colleges—disproportionately Black and Latino students—never graduate, and even for those who do wages are lower than for graduates from other colleges. Three years after college, 18 percent of borrowers from for-profit colleges have loans that are delinquent or have defaulted due to lack of repayment, compared with 3 to 6 percent of borrowers at public and nonprofit colleges. These statuses can damage credit scores, leading to higher interest rates and severely limiting access to mortgages and car loans.

Students who never finish their degree do not see the same wage bump as degree-holders. This financial loss is compounded for those who took out loans to attend college in the first place. Three years after college, 22 percent of non-graduates have loans that are in default or delinquent, compared to 12 percent of graduates. Earning a degree in a timely manner is also important, as those who take longer than four years to complete their degree face extra schooling costs, run the risk of losing financial aid eligibility, and further delay their entry into the workforce.

The wage benefits of a college degree differ considerably across majors. Graduates in computer science and mathematics earn a median wage of $110,000 annually, almost double what graduates in education make ($65,000). There is also a great deal of variation within majors: the top-earning graduates in health make $120,000 annually (75th percentile), twice as much as the lowest-earning graduates in health ($60,000 for the 25th percentile). Nevertheless, even lower-earning college graduates tend to make more than workers whose highest level of education is a high school diploma.

Although workers across gender and racial/ethnic groups see a wage premium for earning a college degree, marked disparities still exist in the labor market. For male workers with a bachelor’s degree, the median annual wage is $92,000, compared with $75,000 for college-educated female workers. Similarly, white workers make more than Black and Latino workers across all levels of educational attainment. Several factors contribute to these gender and racial pay gaps, including labor market discrimination and years of work experience. Further, the underrepresentation of female, Black, and Latino students in the most financially rewarding programs of study, such as computer science and engineering, affects later job prospects, occupations, and earning potential.

While a college degree does not guarantee financial security, for most students it represents their best chance of achieving economic prosperity. Although the state has made enormous progress, more work is needed to improve student success at key transition points, including high school graduation, college enrollment, transfer, and college completion. If current enrollment and completion rates continue, most California 9th graders will not earn a bachelor’s degree. And at every step along the way, low-income students—who account for more than half of the state’s public K–12 students—are less likely than their higher-income peers to make it to and through college. Unfortunately, a similar story holds true for other underrepresented groups.

California and its higher education systems have already made tremendous strides in expanding access and improving completion so that more students can enjoy the benefits of a college degree. At the PPIC Higher Education Center, we are tracking the impact of these historic investments and policy changes, working to ensure that they have their intended effects, and advancing evidence-based solutions to further enhance educational opportunities for all California students.