College is still an investment that pays off

College graduates earn an average of $8,000 more per year than similar individuals who attended college but did not complete a degree, even after accounting for student loan payments.
The earnings premium rises to $10,400 per year when debt is not factored in, highlighting the continued value of a college degree despite rising tuition costs and growing debt.
Despite concerns about debt, the study shows that higher education remains a worthwhile financial investment, with policies promoting college completion and reducing financial barriers able to maximize returns.
The researchers found that student loan payments reduce the immediate financial gains from earning a degree, but long-term benefits remain substantial, especially for those completing undergraduate certificates or master’s degrees.
Policymakers should focus on expanding access to higher education financing, particularly for students most likely to benefit from completing a degree, and consider expanding student loan programs to include non-degree credential programs.

A group of graduating college students wearing mortarboards.

Even after factoring in student loan payments, completing a college degree continues to pay off, according to new research.

The study, published by the Brookings Institution, finds that degree holders earn on average $8,000 more per year than similar individuals who attended college but did not complete a degree—even after accounting for student loan payments.

Without factoring in debt, the earnings premium rises to $10,400 per year.

“Despite concerns about rising tuition costs and growing debt, the data show that higher education remains a worthwhile financial investment,” says Jason Jabbari, an assistant professor at Washington University in St. Louis’ Center for Social Development (CSD) at the Brown School, faculty director of the Clark-Fox Policy Institute and coauthor of the report.

“Our findings highlight not only the continued value of a college degree, but also the importance of supporting students through to completion.”

The research team—which includes Guangli Zhang, Xueying Mei, Yung Chun, and Stephen Roll of the CSD, along with Mathieu Despard of the University of North Carolina at Chapel Hill—used linked data from a national credit bureau and the National Student Clearinghouse to produce one of the most detailed looks yet at the economic return on higher education.

Unlike traditional earnings analyses, the team developed a “debt-adjusted earnings” measure that accounts for student loan payments. This approach provides a more complete picture of how debt affects the financial returns of completing a postsecondary credential.

Their results show that while student debt reduces the immediate financial gains from earning a degree, the long-term benefits remain substantial:

Associate degree holders spend about 9% of their extra earnings on loan payments.
Bachelor’s degree holders spend 19%.
Master’s degree holders spend 57%, though their faster salary growth narrows this gap over time.
Students completing undergraduate certificates also saw meaningful benefits, with debt-adjusted earnings roughly $5,000 higher than those who did not complete them.

“The message here is clear,” says Zhang, a CSD data analyst. “Higher education pays off, but debt burdens vary considerably across degree levels. Policies that promote college completion and reduce financial barriers can maximize these returns.”

The researchers says that pending federal policy changes, such as the One Big Beautiful Bill Act, could limit access to these opportunities. The bill will impose new borrowing caps for graduate students and expand “gainful employment” rules that could restrict federal aid for some programs.

“Our evidence shows that most graduates more than meet federal standards for gainful employment,” Jabbari says.

“Policymakers should focus on expanding—not constraining—access to higher education financing, especially for students most likely to benefit from completing a degree.”

The study also suggests expanding student loan programs to include non-degree credential programs, which can lead to strong financial returns for many workers.

Source: Washington University in St. Louis

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Q. Does completing a college degree still pay off financially?

A. Yes, according to new research published by the Brookings Institution, which finds that degree holders earn an average of $8,000 more per year than similar individuals who attended college but did not complete a degree.

Q. How much does student loan debt reduce the financial gains from earning a degree?

A. The amount of debt-adjusted earnings varies across degree levels: Associate degree holders spend about 9% of their extra earnings on loan payments, while Bachelor’s degree holders spend 19%, and Master’s degree holders spend 57%.

Q. What is the long-term benefit of completing a postsecondary credential despite student loan debt?

A. The long-term benefits remain substantial, with students who complete undergraduate certificates seeing meaningful benefits, including debt-adjusted earnings roughly $5,000 higher than those who did not complete them.

Q. How does the study’s findings relate to federal policy changes, such as the One Big Beautiful Bill Act?

A. The researchers warn that pending federal policy changes could limit access to these opportunities and restrict federal aid for some programs, which could have a negative impact on students most likely to benefit from completing a degree.

Q. What is the main message of the study’s findings?

A. The main message is clear: higher education pays off, but debt burdens vary considerably across degree levels, and policies that promote college completion and reduce financial barriers can maximize these returns.

Q. How does the study’s debt-adjusted earnings measure account for student loan payments?

A. Unlike traditional earnings analyses, the team developed a debt-adjusted earnings measure that accounts for student loan payments, providing a more complete picture of how debt affects the financial returns of completing a postsecondary credential.

Q. What is the significance of the study’s findings in terms of promoting college completion and reducing financial barriers?

A. The researchers emphasize the importance of expanding access to higher education financing, especially for students most likely to benefit from completing a degree, and suggest that policymakers should focus on expanding—not constraining—access to these opportunities.

Q. How do the study’s findings relate to the concept of gainful employment?

A. The researchers argue that most graduates more than meet federal standards for gainful employment, and suggest that policies should focus on promoting college completion rather than restricting access to federal aid for some programs.

Q. What is the potential impact of expanding student loan programs to include non-degree credential programs?

A. The study suggests that this could lead to strong financial returns for many workers, making it an attractive option for students who may not be able to afford a traditional degree program.