Despite rising tuition costs and increasing student loan burdens, completing a college degree continues to offer substantial financial advantages, according to new research from Washington University in St. Louis. The study, conducted by the Center for Social Development (CSD) at the Brown School, provides a detailed look at the economic return on higher education, factoring in the impact of student loan payments.
The Financial Advantage of Completion
The research team, led by Jason Jabbari and Guangli Zhang, used linked data from a national credit bureau and the National Student Clearinghouse to analyze the earnings of degree holders versus those who attended college but did not complete their programs. The findings reveal that, even after accounting for student loan payments, degree holders earn an average of $8,000 more per year than their counterparts. Without factoring in debt, the earnings premium rises to $10,400 annually.
Debt-Adjusted Earnings: A Realistic View
Unlike traditional earnings analyses, the study developed a “debt-adjusted earnings” measure, providing a more comprehensive picture of the financial impact of student loans. The results show that while debt reduces the immediate financial gains from earning a degree, the long-term benefits remain significant. Specifically:
- Associate degree holders spend roughly 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 who complete undergraduate certificates also see meaningful benefits, with debt-adjusted earnings approximately $5,000 higher than those who do not complete them.
Policy Implications and Access Concerns
The researchers emphasize that higher education remains a worthwhile investment, but that policy changes could limit access to these opportunities. Pending federal legislation, such as the One Big Beautiful Bill Act, proposes new borrowing caps for graduate students and expanded “gainful employment” rules, potentially restricting federal aid for some programs.
“Our evidence shows that most graduates more than meet federal standards for gainful employment,” Jabbari said. “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.
In conclusion, despite rising costs and debt burdens, a college degree continues to offer substantial financial advantages. Policies that promote completion and reduce financial barriers can maximize these returns, ensuring that higher education remains accessible and beneficial for all
