It’s no secret that public support for American colleges and universities has eroded in the last few years. Some of that discontent stems from a raft of right-wing political attacks on universities. But much of it is the result of growing and not altogether inaccurate concerns that the price of attending college is too high and that the connection between earning a degree and securing a good-paying career is too tenuous.
There’s plenty that the federal government could be doing to address these concerns if only Republicans and Democrats in Congress could come to an agreement on, for example, the long-delayed reauthorization of the Higher Education Act. (To its credit, the Biden administration has taken some major unilateral steps, such as easing the burden of student debt through measures like the SAVE loan repayment program.)
States, however, play the biggest role in governing and funding institutions of higher learning and managing the pathways between them and employers. So, at least for now, that’s where much of the reform action is—or in some cases is not—taking place.
It would be helpful to have a guide that assesses how well each state is doing on the key metrics of providing students with affordable post-secondary credentials that land them good jobs. Fortunately, a new report from the Strada Education Foundation does just that. The State Opportunity Index offers five indicators for assessing a state’s post-secondary education system, its affordability, and its connections to economic opportunity and workforce needs.
The report’s stated aim is to provide state leaders with a baseline from which they can measure future progress. But it also gives citizens insight into how states measure up right now. Some, like California and Washington, score well on the affordability of their colleges, while others, like Alabama, Pennsylvania, and North Dakota, do poorly. Rhode Island and Utah are the best at aligning their degree output with high-demand/high-wage employment opportunities, while New Hampshire, Louisiana, and Nevada are far behind. And no state, according to the report, is doing well at providing career coaching, paid internships, and other opportunities that, as I wrote about previously in the Washington Monthly, are key to making the college-to-career pathway work for all students.
The State Opportunity Index begins with a unique measure of the return on investment (ROI) students can expect from post-secondary education. Its ROI metric captures the percentage of college degree holders between the ages of 25-34 in a state who:
- earn annual wages that are higher than the median wages earned by those in the same age range who don’t have a post-high school degree, and
- also have cumulative earnings 10 years later that are greater than their total investment in their post-high school education. The total investment includes the net price of education after high school for in-state students at public institutions (i.e., the total cost of tuition, books, fees, and living expenses, minus any grants and scholarships) plus interest and fees accrued in repaying these costs over 10 years.
This ROI measure differs from other estimates in two ways. First, it’s based on individual earnings rather than median earnings. In other words, it shows the percentage of graduates achieving a positive ROI rather than how much the median graduate achieves compared to non-graduates. Second, most ROI calculations focus on institutions, while the Strada report measure quantifies state-level performance.
Alas, The State Opportunity Index is sobering. In a handful of states, like California and New York, the ROI of a college degree is high, as one would hope, but in others, such as North Dakota and Idaho, less than 65 percent of college graduates earn enough to achieve a positive ROI.
The reasons for the disappointing results include college costs that remain far too expensive for many; a failure to maintain adequate data about education-to-employment outcomes; inadequate coaching, advising, and mentoring about how specific educational pathways connect to specific careers; a lack of work-based learning in the form of paid internships; and the failure of too many states to align college degrees to their best employment opportunities.
Here’s what the report has to say about each of these factors.
State ROIs
Counting those who earn either an associate’s or a bachelor’s degree, the percentage of recent college graduates who clear the positive ROI threshold within 10 years varies from a low of 55 percent in Idaho to a high of 79 percent in California, Delaware, and New York.
Washington, D.C., had the highest overall ROI, at 85 percent. However, because most of its degree holders earn their diplomas at institutions outside the District of Columbia or at private institutions, the results are less relevant for the purposes of this report.
About half the states had an ROI percentage of 70 percent or better, considering both two-year and four-year graduates. Notably, the range and results for bachelor’s degree graduates only tended to be slightly higher than those who earned an associate degree.
Two factors—the cost of obtaining a degree and median high school income—influence the percentage of degree holders who see a positive return on their investment within 10 years. But the most critical factor is degree holders’ earnings.
The total cost of obtaining a bachelor’s degree, with student loans paid off within 10 years, ranged from about $35,000 in Wyoming to about $95,000 in Pennsylvania. The median income for state residents with only a high school diploma varied across a much smaller range, from about $30,000 to $42,000 per year.
A student earning a bachelor’s degree from a public institution in Wyoming and working there after graduation is less likely to see a positive ROI than a student in Pennsylvania. That’s because the additional $60,000 Pennsylvania students invest in their education is more than repaid by the higher post-completion wages.
Overall, degree holders earning at least $50,000 per year will likely experience a positive ROI in even the most expensive states, while students earning less than $30,000 per year will not see a positive ROI no matter how inexpensive their education. That’s because their earnings don’t exceed the median of a high school graduate.
How To Improve Post-Secondary Education’s ROI
The State Opportunity Index wisely identifies and scores five policy priorities states can use to improve the value of education after high school. It assesses state standing and national progress on each priority, placing them into one of four categories based on their current progress: Leading (the highest level of progress), Advanced, Developing, and Foundational (the least progress).
Here are the five policy priorities and a summary of their current status.
Clear Outcomes
This priority assesses the extent to which students, institutions, employers, and policymakers have access to specific data on outcomes like graduate earnings and career progress. These outcomes are important for understanding the implications of different educational choices for work, life, and income.
Based on a review of 10 elements in states’ data systems, the report concluded that more than half of states were Leading or Advanced in some categories that define robust education-to-employment information systems.
However, only a few states boast wage records giving insight into the occupational outcomes of post-high school education programs, and fewer than half of the states were Leading or Advanced when it came to tracking outcomes from high school to employment or providing open data files.
Quality Coaching
This priority examines how much coaching, guidance, mentoring, and advising recent graduates have been given to help them connect their educational goals to career prospects. The report measures three dimensions of quality coaching with national surveys of recent graduates: 1) self-reported experiences of coaching and guidance; 2) timely information about career and earnings possibilities; and 3) support for setting goals and overcoming obstacles.
Nationally, only about a quarter of graduates of two-year institutions and about a fifth of graduates from four-year institutions received personalized coaching that included all three dimensions. About half (54 percent) of recent graduates of public two-year and 53 percent of four-year graduates reported receiving personalized coaching or guidance.
Good coaching matters. The report found that recent bachelor’s degree graduates who reported receiving all three dimensions of quality coaching were more likely to have a first job requiring a college degree. They also were significantly more likely to be satisfied with their jobs and the progress they were making toward long-term career goals.
Affordability
Obviously, keeping college affordable helps promote higher levels of completion. If you can’t pay, you can’t stay. College affordability for each state was measured by the number of hours a student would need to work annually, earning their state’s median wage for college students to cover the net price of their education.
Based on that measure, California and Washington were the most affordable states for attending college. A student paying the average net price in these states would need to work less than 10 hours per week during the school year and full-time during the summer to be able to cover the net costs of tuition, fees, and living expenses.
The least affordable states were Alabama, Georgia, Louisiana, Montana, New Hampshire, North Dakota, Ohio, Pennsylvania, and South Dakota. In those states, a student working more than 30 hours per week during the school year and full-time during the summer would still be unable to cover their net post-secondary education costs.
Overall, two states were described as Leading, 15 states as Advanced, 25 states as Developing, and nine states as Foundational. Not surprisingly, four-year institutions were less likely to be affordable than two-year institutions. No states were considered Leading on affordability for four-year institutions, while 24 states hit this mark for their two-year colleges. While 28 states were scored at the Foundational stage for four-year institutions, only New Hampshire was at this stage for the two-year sector.
Work-Based Learning
Based on surveys of recent college graduates, the report determined what percentage of grads had participated in an internship during their education and, if so, whether they had been paid.
Overall, just under half of recent graduates from four-year colleges and universities and one-quarter of recent two-year college graduates had completed an internship (both paid and unpaid).
Slightly more than one-quarter of recent bachelor’s degree graduates and 10 percent of recent associate degree completers held a paid internship while enrolled.
Graduates who completed a paid internship were much more likely to take a first job that required a college degree (73 percent) than those who did not complete an internship (44 percent). In addition, they were more likely to be satisfied with their first job and with their progress toward long-term career goals than students who had an unpaid internship or no internship at all during college.
Employer Alignment
The State Opportunity Index used an employer alignment metric for each state—an average score made up of the supply/demand ratio for a variety of high-demand, high-wage jobs (“opportunity jobs”) and the estimated percentage of bachelor’s degree holders ages 26-30 employed in college-level jobs.
The nine occupations judged to have the best opportunity for strong earning and continued economic advancement were cybersecurity, data analytics, finance and accounting professionals, finance and accounting support, software engineering and development, health care technicians, nursing, engineering, and manufacturing technicians/technologists.
No state met the criteria to be judged Leading; 13 were classified as Advanced, 28 as Developing, and 10 as Foundational.
Alabama, Rhode Island, Utah, and West Virginia were the top states for meeting the talent demand for these “opportunity jobs” in booming sectors of the economy. Alaska, Montana, and New Hampshire were the states most underproducing talent in these occupations relative to demand.
The top states for college-level employment were Maryland, Massachusetts, and Utah, along with the District of Columbia. The states doing the most poorly with college-level employment were Hawaii, Maine, Montana, and Oregon.
The State Opportunity Index builds on earlier efforts from Strada and others to answer questions about the connection between college attainment and remunerative employment—and, perhaps, to eventually restore public confidence in the value proposition of college. As I recently noted in the Washington Monthly, a Strada report co-written with the Burning Glass Institute and released earlier this year tracked underemployment among college graduates. The study, Talent Disrupted: Underemployment, College Graduates, and the Way Forward, found that while a postsecondary degree is more advantageous for job seekers than a high school diploma, it’s no guarantee of employment—and those who end up underemployed after graduation often tend to stay that way.
The State Opportunity Index offers a solid set of recommendations for how higher education leaders, state officials, and business leaders can design clearer pathways between post-secondary education, better job opportunities for individuals, and stronger economic prospects for employers. While most states have progressed along one or two dimensions the index prioritizes, few have pursued the comprehensive strategy the index promotes. Now would be a good time to start. With the road map outlined in this report, states have the tools to begin restoring, bit by bit, the average American’s faith in the value of higher education.
Editor’s note: The Strada Education Foundation is a funder of the Washington Monthly’s higher education coverage.
