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Skills Matter More Than Type of Degree

A new report from Center of the American Experiment reveals that there’s “gold in a two-year degree.” The study found that young Minnesotans who choose a variety of non-four-year career pathways—in skilled manufacturing, health care, construction-related occupations, etc.—can often earn more in a lifetime than their peers with a four-year degree.

Now a new study from the American Enterprise Institute (AEI) in Washington, D.C., confirms this is true across the nation. Data from Florida, Texas and Tennessee make clear that there is a “host of educational pathways—not simply bachelor’s degree programs—that can help put students on the path to educational success.”

According to the study, 85 percent of college freshman say the ability to get a better job is a “very important” reason for going to college. These students would likely be surprised to know that the Georgetown Center on Education and the Workforce estimates that, nation-wide, 28 percent of workers with a two-year associate degree earn more than the median earnings of workers with a bachelor’s degree.

For example, in Texas, the AEI report focused on programs of study from specific post-secondary institutions where the expected return on investment (ROI) for graduates over a 20-year career exceeds $1 million:

Among these highly rewarding programs, 19 are associate level, six are sub-baccalaureate certificates…and the remaining 14 are bachelor’s degrees.

That means more than half of the programs with the highest expected ROI in Texas are at the sub-baccalaureate level.

Most of these highly rewarded programs are in technical fields. Of the top 39 programs in Texas, 27 either have the word “technician” in their nomenclature or “technology” in their program name.

The situation is similar in Tennessee, where apprenticeship programs in technical colleges “have job-placement rates that would make many college programs envious,” according to the study. Estimated earnings for most exceed the state’s 2015 median household income. Likewise, in Florida, several of the post-secondary programs with the highest-earning graduates are apprenticeships in technical fields.

Overall, the AEI report concludes, in the states studied, “many of the programs—bachelor’s degree or otherwise—are producing graduates with high wages and ROI have one thing in common: They graduate students who know how to build and fix things.”

Thus, the study concludes, the central question is not whether post-secondary degrees have value, but

what types of knowledge and skills are in greatest demand and are, in turn, rewarded in the labor market. Framed in this way, the degree a student pursue[s] means much less than commonly held: It is the outcome that matters.

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