Report: Growing Number of College Grads Earn Less Than the Typical High School Graduate

While most colleges are producing graduates who go on to earn incomes higher than your typical high school graduate, a sizable portion of them are not, according to a new report from the HEA Group.Michael Itzkowitz

“We know the number one reason why students attend college is for greater employability and to obtain a financially secure future,” said report author Michael Itzkowitz, founder and president of the HEA Group. “However, over the past several years, we've seen confidence in college declining. In fact, most Americans now doubt that college is even worth the cost of attendance.”

The report, "Ensuring a Living Wage Through Higher Education," examined whether that doubt has any legitimacy, looking at the earnings of about five million students at 3,887 U.S. higher ed institutions. Specifically, the HEA Group assessed whether the median earnings of former students 10 years after enrollment met or surpassed what Itzkowitz called “minimal economic benchmarks,” such as the federal poverty line and minimum wage.

“We wanted to be as generous as possible within our study to show the most promising results for institutions,” he said. “These are really the most generous metrics that the U.S. [Department of Education] has available and the longest timeframe that they allow for within their measurement period.”

For almost all of the studied colleges (3,869 or 99%), their students went on to make earnings above the U.S. federal poverty line, which for individuals in 2023 is $14,580. Students from 87% of the schools (3,401) were found to earn more than $10,000 above the benchmark, and only 18 schools produced students falling below the poverty line, according to the report.

As the bar is raised however, the number of schools producing students earning above these thresholds decreased by notable amounts.

For instance, 92% of the 3,887 colleges (3,582) resulted in their students earning 150% above the federal poverty line, a $21,870 annual salary. Meanwhile, students from a little over three in four schools (78% or 3,035) ended up earning more than a $15 minimum wage – 852 schools (approx. 22%) missed that mark.

“In order to meet basic living expenses, some states have increased their minimum wage to $15 an hour,” Itzkowitz said. “And it's reasonable to think that college attendees would want to make more than the minimum wage after they attend.”

And according to the report, the estimated earnings outcome of a typical high school graduate is $32,000 a year. But the number of U.S colleges whose students earn more than that is less than three-quarters (74% or 2,865) – 1,709 schools produced students who earn more than $10,000 above this benchmark. For a significant number of the examined colleges (1,022 or 26%), their students went on to make less than what a typical high school graduate would make.

The data shows that while college is still worth it and most colleges deliver on their promise to better their student’s lives financially, many still result in their students coming up short, Itzkowitz said, adding that students from some subsets of schools weren’t making enough to make ends meet.

Specifically, for-profit colleges stood out for their disproportionate failings, Itzkowitz said.

“72% of for-profit institutions showed the majority of students failing to earn as much as the typical high school graduate,” he said. “That's in comparison to 14% of public institutions and 9% of private, non-profit institutions.”

And schools predominantly conferring certificates, shorter-term credentials that typically take 6-18 months to complete, comprised many of the institutions that also failed to ensure most of their students earned more than a high school diploma-holder, he said. These are schools that are supposed to teach students technical skills to get them in the workforce quick, including into professions such as being welders, elevator technicians, or auto-mechanics.

“Shorter-term programs, when they work well, [are] one of the fastest paths to socio-economic mobility, they're also often times the riskiest credential awarded in the U.S., meaning that a very high proportion of them lead to no earnings premium whatsoever," Itzkowitz said.

Part of why some students aren’t earning as much may be due to their lack of access to career-building opportunities during their time in college, particularly for students who work part-time in addition to going to school, said Saba Waheed, director of the UCLA Labor Center.

Citing her center’s research, she mentioned that many students often work more than 15 hours a week in jobs unrelated to their academic pursuits to help pay for college. In doing so, they don’t have time available for internships and opportunities to bolster their career experience in their desired fields.

"It makes it harder and harder for working students to get the jobs that they would like because they're not able to participate in the same opportunities compared to if they weren't working,” Waheed said. “If you're trying to be a scientist, and then you're trying to apply to internships or jobs in that field, you don't have the same work experience than someone who didn't have to work.”

The report’s findings demonstrate that higher ed institutions need to focus on data collection on graduates’ career outcomes; transparency about how what’s being taught will be valuable in the workplace; and career-readiness opportunities for students – such as equitable participation in internships and externships – said Dr. Lynn Pasquerella, president of the American Association of Colleges and Universities (AAC&U).

She noted that other research has shown that a college is “still the most reliable pathway to the middle class” and that the college-high school graduate wage gap “strongly favors those with a postsecondary education” 40 years after graduation.

Dr. Karen A. Stout, president and CEO of community college network Achieving the Dream, told Diverse that many of its network schools determine program offerings not based on the federal poverty line but more on “local and contextualized data” and what results in a “family-sustaining wage.”

Sentiment and doubt about whether going to college is worth it continues to circulate, despite earnings for graduates being “strong”; tuition increases being “very low over the last five or six years”; and state funding being “pretty good” in most states for the past decade, said Dr. Robert Kelchen, head of the Department of Educational Leadership and Policy Studies at the University of Tennessee, Knoxville.

“The public perception has really swung against higher ed,” Kelchen said. “Higher ed's been in the news a lot for things that don't make it look good. There's a growing partisan divide on higher ed. There's a lot of frustration about student loan debt.”