Studies Show Community College May Offer Superior ROI to Some Four-Year Schools

Studies Show Community College May Offer Superior ROI to Some Four-Year Schools
Studies indicate that some community college graduates are now finding work at a higher starting salary than their four-year counterparts – and with less debt to boot.

The perception of the value of a college degree appears to be evolving. As some students and their parents begin to focus on their return on investment (ROI), they are beginning to realize that graduating from a prestigious four-year school isn’t as glamorous as it seems. In addition, rising concern over increasing student debt has spurred questions about the best path to a profession. As the exploration continues, community colleges are starting to be seen as offering superior ROI for many students today.

The Value of a Four-Year Degree

PolicyMic reports on a recent analysis that looked at 1,248 four-year colleges and universities across the country. The study showed 28 percent of those four-year schools offered a negative ROI, which means students would have been better off financially if they had not gone to school at all! However, if those students had started their higher education at a community college and then transferred to a four-year school for their last two years, the negative ROI would have been reduced to 11.5 percent.

The best ROI from four-year schools often involved engineering programs. Schools like Colorado School of Mines, Georgia Tech, MIT, and Cal Tech reflect that trend. Ivy League schools also made the list for positive ROIs, demonstrating that high admission standards and a tradition of success do contribute to the value of postsecondary education. Other four-year schools did not always fare as well. For example, the last school on the list, Savannah College of Art and Design left students with a negative return of $189,000.

This video offers an overview of community colleges in New Mexico.

The Debt Problem

One of the biggest contributors to ROI today is the rising student loan balance many students are carrying after graduation. The News-Press reports that in 2011, 66 percent of students graduating from college nationwide left with debt. The average debt amount for those students was $26,600. Student loan debt has now exceeded credit card debt as the number one debt problem in the United States.

What are the reasons for the increasing debt issue? There are actually a number of contributors to the problem, according to the News-Press, including:

  • Increases in tuition rates have exceeded increases in financial aid
  • Scholarship options have been diluted as more students are heading to college
  • Budget cuts have resulted in lower amounts for state-supported scholarships
  • The economic slowdown resulted in lower endowment figures

As a result of these various factors, more students than ever are departing the ivied halls of their college campus with significant amounts of debt. Unfortunately, students are not always able to find jobs right out of school that provides sufficient salaries to address their debt crises. That’s where the ROI comes into play, and why the return on investment has been garnering so much attention in recent months.

Community College vs. Four-Year School

If ROI is calculated according to the cost of education versus the income potential after graduation, community colleges appear to be moving to the head of the ROI pack – at least in some professions. According to a recent report at CNN Money, community college graduates are out-earning their four-year counterparts in a number of fields today. The publication cites statistics from a recent study by Georgetown University’s Center on Education and the Workforce, which showed nearly 30 percent of Americans with two-year degrees are now earning more than graduates with bachelor’s degrees.

A number of states have also conducted separate research showing salaries for community college graduates right out of school exceed those of graduates from four-year institutions. For example, students coming out of occupational and technical programs in Virginia are earning an average of $40,000 annually, which is $2,000 more than four-year graduates. In Tennessee, the average annual salary for community college graduates was $38,948 - $1,300 more than graduates from four-year schools.

This video offers a look at community colleges in Montana.

Where the Jobs Are

Community colleges are offering a wide variety of degree options today. Many of those programs use partnerships with local businesses to ensure training meets the direct and immediate needs of the area workforce. While community college training in the past was often restricted to blue-collar jobs, today’s technology has created a whole new field of manufacturing that requires specialized training and involves higher salary opportunities.

Some of the highest paying jobs community college graduates are landing today include air traffic controllers, radiation therapists, dental hygienists, nuclear technicians, and registered nurses, according to CNN. Salaries for these positions range from around $68,000 for registered nurses to more than $113,000 for air traffic controllers. In addition to high salaries, the Georgetown study found jobs for community college graduates are plentiful. The center estimates that nearly 29 million jobs paying middle-class salaries today require a community college degree, rather than a four-year program.

This video compares 2 year with 4 year colleges.

The Daily Herald reports that another wide-open field for community college graduates is plumbing, which can pay an annual salary between $28,000 and $82,000. In addition, the publication cites statistics from the U.S. Bureau of Labor Statistics, which shows growth for jobs for plumbers at around 26 percent through 2020. With an average annual tuition cost of around $2,000 to $2,400 at Mississippi community colleges, the Daily Herald demonstrates the value of a community college degree to prepare for this line of work.

As ROI becomes a major consideration for students preparing for higher education, the value of a community college degree is on the rise. As more students, parents, and business leaders realize the importance of community colleges in preparing students for the 21st-century workforce, focus on these two-year schools is sure to continue.

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