More Money for Less Time? Examining the Relative and Heterogenous Financial Returns to Non-Degree Credentials and Degree Programs

Background and Purpose: In addition to low-skill jobs (e.g., that are typically filled with high school diploma holders) and high-skill jobs (e.g., that are typically filled with bachelor degree holders), there is a large and growing number of jobs that require “middle” skills that can be obtained with post-secondary education and training opportunities between a high school diploma and a bachelor’s degree, such as associate’s degrees and non-degree credentialing programs. At the same time, there is a large and growing number of jobs that require advanced skills, and subsequently, a large and growing number graduate degree programs. Nevertheless, research on the financial returns to non-degree credentials and degree-granting programs is often narrow, siloed, and focused on short-term outcomes. As a result, it is difficult to ascertain the relative returns to a variety of post-secondary educational options.

Methods: To fill this gap, we create a national sample of 113,032 individuals across nine MSAs and four industries to examine the relative financial returns to a variety of non-degree credentials and degree programs. Specifically, we leverage data from the National Student Clearinghouse and a large credit bureau. Our sample includes individuals who obtained a non-degree credential or completed a degree program between 2017 and 2023. Noting the limitations of fixed effect modeling strategies, we employ a semi-parametric difference-in-difference model advanced by Callaway and Sant’Anna (2021).

Results: We find that non-degree credentials appear to demonstrate similar and—in the case of non-degree credentials from industry—greater earnings increases when compared to two-year degree programs, despite often taking one year to complete. This suggests higher proportional earning premiums for non-degree credentials from industry relative to the time it typically takes to complete these programs. At the same time, earning premiums for Bachelor degree completers appear to exceed earnings premiums for those who completed an Associate’s degree beyond the additional time it takes to complete a Bachelor’s degree. Here, we might expect the marginal returns to a Bachelor degree to be twice that of an Associate’s degree, but it’s over three times that of an Associate’s degree. The same can be said of Master’s degrees, which were nearly comparable than that of a Bachelor’s degree despite taking half of the time, as well as that of Doctorate degrees, which had earnings premiums that were substantially greater that of a Bachelor's degree.

Conclusions and Implications: Concerning education finance, our findings suggest that not all non-degree credentials are created equally. Indeed, non-degree credentials from industry tend to be associated with steadier increases, leading to greater earnings premiums than non-degree credentials from education institutions. Our findings also represent a departure from a linear distribution of income according to years of schooling (e.g., like those based on the Mincer model). For example, non-degree credentials from industry demonstrate greater earnings increases than two-year degree programs despite often taking less time to complete. As a result, policymakers should consider making public investments across a range of non-degree programs, especially those from industry.