California College Programs That Pay

Measuring Return on Investment Across Majors and Credentials

A Golden Opportunities Report Centering Educational Costs and Value to Learners

October 3, 2024

This report was commissioned by College Futures Foundation. A full version of the report can also be found here on their website.

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Foreword

College Futures Foundation is deeply committed to tackling the crisis of value in higher education in order to effect learner- centered change and create opportunities that elevate economic mobility, particularly for learners who are underserved. So, we set out earlier this year to assess the value of a postsecondary education, focusing initially on the economic returns institutions can provide learners on their journey toward greater social and economic mobility.

Our May 2024 Golden Opportunities seminal report started important conversations about the return on investment (ROI) that low- and moderate-income learners obtained after attending an institution of higher education. That initial research covered 731,000 low- and moderate-income undergraduate learners at 292 institutions of higher education throughout California and helped us better understand how long it takes them to recoup their educational costs.

What we discovered through that rich mining process and subsequent conversations that ensued was what was missing and where we needed to go next.

In response, this next phase of work offers a nuanced look at what kind of ROI programs within an institution provide their students. Lead author and researcher Michael Itzkowitz of the HEA Group examined over 260,000 graduates across 2,695 undergraduate certificate, associate’s, and bachelor’s degree programs within California.

The result is embodied in this spotlight report, California College Programs That Pay: Measuring Return on Investment Across Majors and Credentials, which evaluates the ROI of fields of study within higher education institutions. As you will see, the major students choose, and the credential they obtain, can substantially affect the time it takes them to see a return on their educational investment. And in some areas of study, ROI is never realized.

Please note this report is issued with an imperative: the challenge to improve. This ROI research and the specificity it provides can and should empower California’s higher education institutions and their leaders, elected and appointed representatives, researchers at large, and the public with data that speaks and directs action. Learners deserve access to information so they can enter a program with eyes wide open about what they can expect; and institutions need to be transparent with their data and honest about how their programs deliver on the promise of economic mobility.

The chorus calling for change in higher education continues, and it is data that informs what changes will be most beneficial to delivering value and addressing access to opportunities. Join us in absorbing this information so we can continue action-oriented conversations to consistently improve our postsecondary system and provide an equitable path to prosperity for learners in California.

Eloy Ortiz Oakley
President & CEO
College Futures Foundation

Introduction

Earlier this year, we released an analysis seeking to help institutional leaders, researchers, and policymakers evaluate the return on investment (ROI) for low- and moderate-income learners attending an institution of higher education within the state of California.¹ Within it, we examined the cost that learners pay out of pocket relative to the “earnings premium” they gain after enrollment. These two factors allowed us to calculate a “Price-to-Earnings Premium,” which measures the time it takes learners to recoup their educational costs.²

While this information is critical, it falls short of recognizing intricacies that exist within an institution itself.

In this report, we take a closer look at individual college programs and the time it takes graduates to recoup their educational costs after earning their credential within specific fields of study. The report provides policymakers, college administrators, researchers, and advocates with additional data on how well individual college programs serve learners from an economic perspective.³

Methodology

This analysis uses data from the U.S. Department of Education’s College Scorecard to assess the earnings outcomes of approximately 260,000 graduates of 2,695 undergraduate college programs offered by 324 institutions across California.^4,5 Unlike our initial report, Golden Opportunities: Measuring Return on Investment in California Higher Education for Low- and Moderate-Income Learners, this report focuses on the outcomes of learners who have graduated from an undergraduate program of study, rather than all who enrolled in an institution regardless of their completion status. Furthermore, our initial report concentrated on the outcomes of low- and moderate-income students, specifically. In contrast, this report broadens that demographic to include all students who have received a grant or a loan from the federal government.

Notably, those who are eligible to receive a federal grant or loan are often from low- and moderate-income backgrounds. However, limiting this analysis to that student demographic would have substantially reduced the availability of earnings data, as the vast majority of outcomes for these students are unavailable due to privacy suppression when performing a more nuanced examination that focuses on individual fields of study.⁶

Similar to our previous report, Golden Opportunities: Measuring Return on Investment in California Higher Education for Low- and Moderate-Income Learners, this report uses a Price-to-Earnings Premium (PEP) to assess how long it takes the typical program graduate to recoup their educational costs after earning their credential.⁷ In order to calculate the PEP for each college program, we examine two factors: 1) the out-of-pocket—or “net”—costs that learners and families pay to complete a credential and 2) the “earnings premium” that learners gain by graduating within a certain field of study.

In order to determine how much each credential costs, we assume that learners pay one year’s worth of net costs to earn a certificate, two years to earn an associate’s degree, and four years to earn a bachelor’s degree.⁸ Notably, this is a conservative estimate, as some learners may take longer and pay more in out-of-pocket costs to complete their credential.⁹ We then use the annual net cost that each individual institution reports—the out-of-pocket expenses that learners are responsible for after all grants and scholarships are deducted—to calculate the total cost of earning a credential.¹⁰ Because net cost data is unavailable for individual college programs, this study applies an institution’s reported net cost to each of its programs regardless of the field of study.¹¹

Next, a PEP calculates the earnings premium that each college program produces for its graduates. An earnings premium is defined as the additional income a college graduate makes in comparison to someone with a high school diploma, but no college experience.¹² First, we use U.S. Department of Education data to determine how much learners make five years after earning their credential.¹³ Then, a PEP assesses how much those learners make in comparison to a high school graduate in California with no college experience, measured to be $26,073 per year.¹⁴ If a college program allows its graduates to earn more than this amount, those additional earnings can then be used to pay down the out-of-pocket costs required to earn their credential in the first place.

Total Net Cost to Earn a Credential / Earnings Premium
(Program Graduate Earnings - Typical Salary of a High School Graduate)
= Number of Years to Recoup Educational Costs

Below, we show three examples of the PEP for programs offered at the University of Southern California (USC). The outcomes of specific fields of study that learners pursue may differ depending on the institution that offers them.

This comparison shows us that while a bachelor’s degree awarded from USC costs $117,848 in out-of-pocket expenses for the typical learner, their choice of program can heavily affect their future salary prospects and, subsequently, the pace at which they earn back those costs over time. For example, those who graduate with a degree in economics from USC are shown to earn an annual salary of $98,555—that’s $72,482 more than the typical high school graduate in California. Those additional earnings allow them to pay down their $117,848 in net costs within 1.6 years.

However, USC graduates who major in music earn far less—only $24,763 per year. Because this fails to exceed the salary of the typical high school graduate without any college experience ($26,073), these learners may never recoup the out-of-pocket costs required to obtain their degree.

Years to Recoup Educational Costs

All College Programs

The vast majority of college programs within California (88%) enable their graduates to recoup their educational costs within five years. And, over a third (34%) show that their graduates are able to recuperate their costs in under a year. This means these graduates now earn a high enough premium—while having paid an affordable enough price—to pay down their costs of earning a credential quickly.

However, it takes longer for the graduates of some programs to earn back their costs of obtaining a credential. For example, 12% of college programs within California show their graduates taking five years or longer to recoup their out-of-pocket costs. And 112 of those programs (4% of all programs) produce no economic ROI for their graduates. These learners have paid their tuition, completed all of their coursework, and earned their credential. Yet, even five years after these learners complete their program of study, the majority still fail to earn more than someone with no college experience whatsoever.¹⁵

Program Level

The level of undergraduate credential—whether it’s a bachelor’s degree, associate’s degree, or a certificate—can also influence how long it takes graduates to recoup the costs they’ve paid to complete their program. Generally, associate’s degree programs show their graduates recouping their educational costs more quickly than others. The relative affordability of two-year colleges in California, coupled with the earnings premium that they produce, provides most associate degree-holders with a quick return on their educational investment.

More than nine out of 10 (91%) associate’s degrees show their graduates earning back their costs of obtaining their credential within five years. And nearly two-thirds (65%) allow these graduates to recoup their costs within just one year’s time. Generally, bachelor’s degrees take longer to complete, cost more over time, and take graduates longer to recoup their educational costs. But because they often result in a higher earnings premium than associate’s degrees, most (92%) still enable their graduates to recoup their costs in less than five years. While some certificates enable their graduates to recoup their costs quickly, this degree type is also the most likely to result in a lower earnings premium and longer payback period. For over a third of certificate programs (34%), it takes graduates five years or more to recoup their educational costs. And nearly a quarter of these programs (23%) show the majority of graduates earning less than someone with no college experience. While a few of these low-value certificate programs are offered at public institutions, many are concentrated within the for-profit sector.

Sector of Institution

Different sectors of education—whether public, private non-profit, or for-profit—tend to concentrate on providing certain types of postsecondary credentials. For example, in California, public and private non-profit institutions offer more bachelor’s degree programs, while for-profits often focus on awarding shorter-term certificates.¹⁶ Yet, there are also substantial differences in the sector delivering the education and the length of time it takes its graduates to recoup their educational investment. College programs offered at public institutions generally offer a faster ROI.

Almost all programs offered at public institutions (97%) in California show their graduates able to earn back the costs of obtaining a postsecondary credential within five years of completing their program of study. And nearly half of public programs (48%) enable their graduates to recoup their costs in less than a year. In comparison, programs offered at private non-profit and for-profit institutions take longer. While most programs offered at private non-profit institutions (83%) enable graduates to recoup their educational costs within five years, only 7% of these programs show the same result within one year’s time. Similarly, only 60% of programs offered at for-profit institutions leave graduates earning enough to recoup their costs within five years. And nearly a fifth of for-profit programs (17%) show no economic ROI for their graduates.

Most Popular Programs

Overall, California institutions of higher education provide more than 200 fields of study for undergraduate learners to consider. However, depending on the college program learners choose—and the credential they obtain—their likelihood of paying down their educational costs may vary considerably. In an effort to evaluate the fields of study that undergraduate learners pursue most often, we compare the length of time it takes graduates to recoup their educational costs across the most popular programs by degree type.

Most Popular Bachelor’s Degree Programs

Among bachelor’s degrees awarded, the most popular programs of study include: 1) business administration, 2) psychology, 3) sociology, 4) communication and media studies, and 5) registered nursing.¹⁷ Most of these programs enable their graduates to recoup their educational costs between one and five years of completing their degree. In fact, none of these bachelor’s degree programs—at any institution across California—show their graduates taking longer than 10 years to recoup their costs of earning a degree. However, only one of the most popular bachelor’s degree programs—registered nursing—allows its graduates to earn back their educational costs in less than one year in most cases across the state. In fact, over two-thirds of bachelor’s degrees awarded in registered nursing (69%) show their graduates able to recoup their costs in less than 12 months.

Most Popular Associate’s Degree Programs

Among associate’s degrees awarded, the most popular programs of study include: 1) liberal arts and sciences, 2) registered nursing, 3) allied health diagnostic, intervention, and treatment professions, 4) business administration, and 5) allied health and medical assisting services. Compared to the most popular bachelor’s degree programs, many of the most frequently awarded associate’s degree programs enable their graduates to recoup their educational costs in less than one year’s time. The most popular associate’s degree program—liberal arts and sciences—shows its graduates earning back the costs of their degree within five years at over nine out of 10 institutions (95%) that offer it. While some of these learners may transfer or go on to pursue additional education, the relatively affordable cost of earning an associate’s degree also increases the likelihood that graduates are able to recoup these costs soon after earning their credential.

Most Popular Certificate Programs

Among certificates awarded, the most popular programs of study include: 1) allied health and medical assisting services, 2) cosmetology, 3) vehicle maintenance and repair, 4) practical nursing, and 5) dental support services and allied professions. While some of the most popular certificate programs—such as vehicle maintenance and practical nursing—often enable their graduates to recoup their educational costs within one year of earning their credential, others show mixed results. For example, almost half of dental support services programs (46%) show their graduates taking at least 10 years to recoup their costs after completing their credential.¹⁸ Other programs, such as cosmetology, show even more worrisome results. Over nine out of 10 cosmetology programs (96%) leave their graduates with no economic premium on their educational investment, meaning they now earn even less than the typical high school graduate with no college experience.¹⁹

Programs within Institutions that Enroll a High Proportion of Low- and Moderate-Income Students AND Provide a Quick Return on Investment

Our first Golden Opportunities report focused on how well California colleges serve the low- and moderate-income learners they enroll.²⁰ We found that while many institutions offer a quick ROI for this demographic, only a few of these learners are offered admission each year. However, we also identified nine institutions that enroll a high proportion of low- and moderate-income students and provide them with a quick ROI. Many of these institutions are part of the California State University system (Bakersfield, Dominguez Hills, Fresno, Los Angeles, Northridge, Sacramento, San Bernadino, and Stanislaus) with one from the University of California system (Merced).

In comparison to our initial Golden Opportunities report, this analysis focuses on the earnings outcomes for federal aid recipients who completed a college program, and does not disaggregate further by the income of learners and families. That being said, looking at the programmatic-level outcomes within these nine institutions gives more insight into their above-average outcomes for the many low- and moderate-income students who attend.²¹

For example, we can see that over half of the programs offered at these institutions enable their graduates to recoup their educational costs in under a year. And almost all programs of study at these institutions show the same result in under five years’ time for those who earn a degree. Some factors that may contribute to these outcomes include:

Students are responsible for less than $11,000 in out-of-pocket costs per year at each of these institutions, and some of these institutions cost much less than that amount (especially for low- and moderate-income students).
Out of the 294 bachelor’s degree programs these institutions offer, 223 (76%) show their graduates earning more than $50,000 per year within five years of earning their credential.
For each of the most popular bachelor’s degree programs offered at these nine institutions (business, communications, psychology, sociology, and nursing), the longest it takes graduates to recoup their educational costs is 2.3 years.²²

Conclusion

It is generally true that the more schooling you complete, the more money you earn over your lifetime.²³ Even so, the return on educational investment varies significantly—and that matters because postsecondary education is one of life’s largest financial investments. Our previous Golden Opportunities report showed that some institutions of higher education in California demonstrate a higher likelihood that learners will recoup their educational costs quickly after they graduate. This report provides a deeper look, revealing how programs of study also drive dramatically different ROI results for learners. These data are intended to continue the conversation, offering further insight to institutional leaders, state policymakers, and education advocates who are striving for a higher education system that welcomes—and works—for all Californians.

Centering Educational Costs and Value to Learners

This report is part of a series developed by the HEA Group and commissioned by College Futures Foundation with the belief that a clear-eyed understanding of the return on investment of postsecondary options is necessary for learners and their families to achieve greater social and economic mobility.

How College Programs Pay Off: Measuring Return on Investment by Majors and Credentials Across California includes this report + data available for download.

Golden Opportunities: Measuring Return on Investment in California Higher Education for Low- and Moderate-Income Learners also includes a report and data for download.

Learn more at CollegeFutures.org.

Endnotes

1. College Futures Foundation and the HEA Group, Golden Opportunities: Measuring Return on Investment in California Higher Education for Low- and Moderate-Income Learners, May 2024.

2. The Price-to-Earnings Premium metric was originally developed with and for Third Way.

3. For more information on California’s budget for higher education, see here.

4. This analysis covers 1,679 bachelor’s degree programs, 601 associate’s degree programs, and 415 certificate programs. Some college programs graduate only a few learners, and their data is suppressed to protect student privacy. Those programs are excluded from this analysis.

5. Our initial report, Golden Opportunities: Measuring Return on Investment in California Higher Education for Low- and Moderate-Income Learners, analyzed 292 institutions across the state of California. Due to additional updated data released by the U.S. Department of Education, this second report in the series examines 324 institutions across the state.

6. For all earnings data provided by the U.S. Department of Education, please see here.

7. College Futures Foundation and the HEA Group, Golden Opportunities: Measuring Return on Investment in California Higher Education for Low- and Moderate-Income Learners, May 2024.

8. The time to earn a certificate varies on the institution and college program, but typically takes between six and 18 months.

9. The time to complete used in the analysis is a generous estimate, as it often takes longer to complete a credential. For example, according to the National Student Clearinghouse, it takes 3.3 years for students to complete an associate’s degree and 5.1 to complete a bachelor’s degree. Please see here.

10. If an institution has multiple campuses located under the same 6-digit OPEID within the state of California, a weighted average is used to calculate its net cost. Only campus locations within the state of California are included in the net price calculation.

11. Currently, disaggregated data on how much learners pay out-of-pocket to obtain a credential in different fields of study within an institution is unavailable. Difference in net costs may vary from program to program within an institution. Institutions with fewer than 10 students in their net cost calculation are excluded from this analysis.

12. An institution’s main campus must be located in California for it to be included within the analysis. If an institution also has campus locations in a different state, yet that out-of-state campus location also shares the same 6-digit OPEID, offers the same program, and offers it at the at the same credential level, the outcomes of those learners may also be included in the earnings data.

13. Earnings data includes all learners who have received federal financial aid. The U.S. Department of Education estimates that this covers 70% of all college graduates nationwide. Please see here. For all earnings data provided by the U.S. Department of Education, please see here.

14. The annual salary of high school graduates in California is derived from the American Community Survey of the U.S. Census Bureau. It reflects working individuals in California between 25 and 34 years old who have graduated school, but never attended college.

15. Institutions report their credentials, and the level of credential, offered to the U.S. Department of Education. Earnings data in this analysis are reflective of that classification.

16. Within the available programmatic data for California institutions, educational sectors differ on the credential awarded most often. Public programs consist of 66% bachelor’s degrees, 28% associate’s degree programs, and 6% certificate programs. Private non-profit programs consist of 93% bachelor’s degree programs, 3% associate’s degree programs, and 4% certificate programs. For-profit programs consist of 18% bachelor’s degree programs, 22% associate’s degree programs, and 60% certificate programs.

17. The most popular credentials are listed in order of the field of study with the most graduates reported.

18. A quarter of certificate programs in dental support services also result in no economic premium for their graduates.

19. In a previous court filing against U.S. Department of Education Secretary Betsy DeVos, the American Association of Cosmetology Schools argued that actual income data within the cosmetology profession is often underreported, as it mainly operates on cash payments. However, Secretary DeVos’ administration claimed the association provided “no evidence that unreported income being an actual—much less widespread—practice among cosmetology program graduates.” For more information, please see here.

20. College Futures Foundation and the HEA Group, Golden Opportunities: Measuring Return on Investment in California Higher Education for Low- and Moderate-Income Learners, May 2024.

21. These nine institutions have 294 bachelor’s degree programs within the currently available data. Please note that these data reflect the costs and earnings of the typical learner who graduates from these institutions. Our previous report, Golden Opportunities, used data reflective of low- and moderate-income learners, specifically.

22. The most popular programs highlighted in this section of the report reflect those that confer the most degrees nationwide. The most popular awards within these specific institutions may differ.

23. U.S. Bureau of Labor Statistics, “Education Pays,” 2023.