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ROI Equal for Associate and Bachelor's Degrees

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July 16, 2014

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ROI Equal for Associate and Bachelor's Degrees

Researchers from the Federal Reserve Bank of New York analyzed more than 40 years of data to determine that the return on investment (ROI) for both associate and bachelor's degrees has been about 15 percent for the past decade.

Because community college tuition rates are so low, and can be subsidized through student aid and tax benefits, students often pay little or nothing to attend. Therefore the cost for getting an associate degree really amounts to the opportunity costs of forgoing wages for those two years--about $46,000--while bachelor's degree opportunity costs are just over twice that. In addition, four-year tuition costs, even with student aid and tax benefits, are higher.

When these costs are weighed against earnings--workers with an associate degree earn at least 20 percent more and bachelor's degree holders earn 75 percent more than high school diploma earners--the result is a return on investment of about 15 percent for both degrees. (However, it should be noted that the researchers used the traditional student trajectory of full-time, one-time college attendance rather than considering students who leave and re-enter the education pipeline or who work and attend school part-time.)

The researchers also note the difference in return on investment for different college majors, with technical fields, such as engineering and computers, health care and business, leading the pack.

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