New Research Adds to the Complex Story on College ROI

Three fresh reports look at graduate underemployment, colleges that don’t pay off, and why simple narratives on ROI miss the mark.

Research seeking to answer the question of whether college “pays off” continues to pile up. And the answers remain nuanced, even as the debate around it can be maddeningly simplistic.

Three new reports add to that picture. In turn, they look at:

  • Underemployment among bachelor’s degree holders, which is large and “sticky.”
  • The 1K colleges that provide little financial boost.
  • And the shortcomings of both the “college for all” and the “don’t bother” narratives.

Graduate Underemployment

The first report, released today by the Burning Glass Institute and the Strada Education Foundation, found persistently high rates of underemployment among four-year college graduates. One year after graduation, more than half of bachelor’s degree holders were working in jobs that typically don’t require such a degree.

Even 10 years on, 45% remained underemployed.

“Underemployment is a large and persistent problem,” the report says. “In spite of a historically tight labor market, the underemployment of college graduates remains stubbornly high.”

While recent graduates employed in college-level jobs earn an average of $60K a year, or 88% more than someone with just a high school diploma, underemployed graduates earn only $40K—putting their earnings just 25% above high school completers. That is consistent with research from the Federal Reserve Bank of New York, which has shown that the bottom quarter of bachelor’s degree holders earn no more than the median wages for high school graduates. It also has a measure tracking underemployment of recent college graduates over time.

The type of institution students attend and what field they major in have a major influence on whether they will land a college-level job. 

  • Institutions: Graduates of for-profit colleges, open-access institutions of all kinds, and colleges with higher concentrations of low-income students all have especially low rates of college-level employment. 
  • Lagging Majors: Two-thirds of graduates in public safety were underemployed after five years, and graduates in recreation and non-math intensive business programs, like marketing and human resources, also saw especially high rates of underemployment. 
  • Leading Majors: On the flip side, only a quarter of graduates in engineering and nursing and other health professions were underemployed.

Perhaps not surprisingly, the report also found stark differences based on race and ethnicity, with Black and Latino graduates the least likely to land jobs at their education level. Women were more likely than men to have college-level jobs.

Underperforming Colleges

A second report from the HEA Group, a research consultancy led by Michael Itzkowitz, found that 1K colleges don’t provide their typical graduate a wage premium above that of the average high school completer. And it names names.

“The vast majority of people pursue a postsecondary education with the intention of bettering themselves financially,” says Itzkowitz, who previously served as director of the federal College Scorecard. “It’s critical that students leave better off—and with more confidence that their college experience was worth it—after they attend.” 

  • About 8% of institutions fail to even bring their graduates above 150% of the poverty line—well below what the average high school graduate makes.

Those tend to be small, local for-profit colleges, especially those focused on certificate programs in cosmetology and massage therapy. Such institutions have a well-established record of leaving students with low wages and unsustainable debt.

New gainful employment regulations implemented by the Biden Administration would likely rescind aid eligibility for many of those institutions in 2026, if they go into full effect as currently planned. The U.S. Department of Education has identified 1.7K low-performing programs, serving around 700K students, that are likely to fall short of the new standards. The number of institutions affected would likely be lower, as many offer multiple programs. 

In the HEA Group analysis, about 44% of institutions had graduates earning at least a $10K premium over workers with only a high school education. Those disproportionately are colleges and universities that mostly award bachelor’s degrees, while those offering only certificates are the least likely to provide a premium.

“When short-term programs work well, they offer one of the fastest paths to socioeconomic mobility, as they cost less overall and allow students to enter the workforce immediately,” Itzkowitz says. “However, they remain some of the riskiest types of programs.”

College for Many

The final report, an analysis by Brent Orrell and David Veldran of the American Enterprise Institute, argues for a nuanced view, illustrated by the kinds of complexities in the other two reports.

Orrell and Veldran draw on a wealth of data on employment, earnings, and nonfinancial measures of wellbeing like health and volunteering to show that a bachelor’s degree still pays off on average. But many people fall outside those averages.

Ultimately, they argue, the value of a degree depends greatly on an individual’s interests, finances, and goals. Broad narratives that universally champion or dismiss bachelor’s degrees fail to capture this nuance. With quality counseling on college and career options, the four-year degree is still a good bet for those able to complete it, Orrell and Veldran write. But it is not the only path to prosperity.

“Predominant narratives about the bachelor’s degree—that say either “BAs for everyone!” or “Don’t bother with college”—are misguided,” they say.

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