Fed Confirms: Even A Couple Years Of College Is Better Than Nothing

Obtaining a post-secondary education has long been seen as the gateway to a better future. However, with so many degree options available – four-year bachelor’s degree or two-year associate degree, just to name a few – consumers may not know what to look for when it comes to the best return on investment.

A New York Federal Reserve Bank Study found that both associates and four-year degrees remain solid investments for college-bound consumers, the Wall Street Journal reports.

NYFRB economists found that the return on investment for college graduates has held constant at about 15% for the past decade.

Likewise, they found the difference in wages between bachelor’s and associate degrees to be relatively constant. A bachelor’s degree holder currently makes about $65,800 annually, while an associate degree holder makes about $46,300.

While the new study reinforces the idea that a four-year degree will mean earning more in the future, states that are combing through degree data of public colleges have found that two-year degrees are sometimes a better bet for higher wages right out of school.

Researchers found some associate degrees in technical fields, specifically those related to the medical industry, out-earn those of four-year degrees.

According to the WSJ, figures in Indiana show that a year in the workforce for a graduate of Ivy Tech Community College on average makes more than a similar graduate at Indiana University.

The state’s first return on investment report last year found the average salary for a graduate with an associate degree was more than that of a bachelor’s degree-holder after a year in the workforce. However, over time, the four-year degree holder began to surpassed his counterpart five years after graduation, with the gap continuing to grow to nearly $7,000 annually after 10 years.

In Colorado, the figures are much the same. A graduate with a two-year nursing degree from Front Range Community College reported her degree cost $23,000 and her starting wage was $53,000. She says the hospital she works for doesn’t increase salary of four-year degree holders any faster than those with two-year degrees.

Regardless of whether a consumer chooses a two-year associate degree or a four-year bachelor’s degree, they are already better off than consumers who don’t attend college.

Wages for high-school graduates have been falling, which only helps keep the earnings premium for a college degree near its all-time high, the WSJ reports.

Surprising Findings on Two-Year vs. Four-Year Degrees [The Wall Street Journal]

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