Relative Advantages of Associate Degrees and Certificates

Study suggests that low-income students get bigger payoff from practical credentials than some two-year degrees -- and shows value of data produced by state unit record systems.
January 22, 2009

WASHINGTON -- Many of the findings produced by a new in-depth study of the educational and employment outcomes of low-income students fell into the category, as the researcher Louis S. Jacobson described them, of "the truths your mother told you" -- in other words, they mostly confirmed widely held suppositions about the links between education and work force success. Being from a low-income background hurts students' chances of educational progress. Those who struggle in high school tend to fare less well in college and beyond. The further one advances educationally, the better one fares economically. Taking courses in fields that pay well tends to produce higher wages.

But the study, which was conducted by the research organization CNA and the Hudson Institute and financed by the Bill and Melinda Gates Foundation, also promulgated some findings that challenged the status quo, especially in suggesting that low-income students who struggle in high school get more of an earnings boost by earning a certificate than they do achieving an associate degree at a two-year college.

Although some leading higher education researchers invited to respond to the study warned against a sweeping embrace of that conclusion, citing limitations in the data, they also cited the report -- which was based on data produced by the State of Florida's unusual system for linking its citizens' education and employment records -- as evidence of the need for many more states to create such data systems, an idea that is building steam but still opposed in some quarters for privacy reasons.

"Increasingly in this economy, some form of postsecondary education and training, degreed or not, is the prerequisite for middle class earnings now," said Anthony P. Carnevale, research professor and director of Georgetown University's Center on Education and the Workforce. The only way to truly understand what sorts of education produces the best economic outcomes, he said, is "to understand the connection between what happens in the schools, particularly postsecondary, and what goes on in the labor market. Integrating educational and economic data to track outcomes, Carnevale said, "seems like a small and geeky thing, but it isn't."

The study, "Pathways to Boosting the Earnings of Low-Income Students by Increasing Their Educational Attainment," was the subject of a half-day forum Wednesday at the Hudson Institute's office here. The researchers presented their findings and then -- to their credit -- let some highly respected researchers from a range of perspectives take their turns critiquing it.

By tapping into the rich reams of student data produced by Florida's longitudinal records system -- which examine 225,000 students who were in public high schools in 1996 and follow them through 2007 -- the authors are able to show how students from a range of economic backgrounds flow through that state's public colleges and into its work force, to see "what actually happened to them," said Diana Furchgott-Roth, a senior fellow at the Hudson Institute and co-author of the study. (The data are limited to those students who attended public high schools and stayed within Florida for college.)

Much of what they found reaffirms concerns that arise whenever policy makers look at the success of students from low-income backgrounds in higher education. Among their findings:

  • Access to college depends heavily on students' financial backgrounds. Only 55 percent of students who qualified for free and reduced lunch (a federal proxy for low family income) attended college, compared to 62 percent of other students. Twenty-five percent of free and reduced lunch students attended college within two years (compared to 39 percent of other students) and 17 percent completed a year's worth of college, compared to 30 percent. Non-free and reduced lunch students were also more than twice as likely as their less-wealthy peers to earn a college credential within six years.
  • High school grades also appear to have a significant influence on college outcomes. Of students who earned an A average in high school and attended college within two years of graduation, 52 percent earned a B.A. or graduate degree, 17 percent a certificate or associate degree, and 31 percent no credential at all. A full 82 percent of C students who entered college within two years earned no credential. In addition, students with a C average were significantly likelier to attend community colleges than were those with A averages in high school.
  • Those who achieved a higher credential earned more money. Students who earned a certificate had median earnings that were 27 percent higher than than those with no college credential; those with a bachelor's degree earned about 35 percent more than those with no credential; and those with graduate degrees made about 62 percent more. Interestingly, though, students with just an A.A. degree did only 8 percent better than those with no credential at all -- quite a bit less well than those with certificates.
  • Student earnings varied greatly by discipline, most acutely for those with certificates and associate degrees. The median income for students in health-related fields was higher than the 75th percentile for all other fields, including the so-called STEM fields (science, technology, engineering and math) and professional fields such as communications and management. (Among bachelor's degree earners, the fields were much more closely grouped, except for the humanities, which lagged.)

The finding that students who earned certificates earned more than those with an associate degree, and another suggesting that students who earned a C in high school were only slightly less likely than A students to earn a credential in health-related and other higher-paying fields, were arguably the most surprising of the study. "Together these two results suggest that it is feasible for students who attend two-year colleges and do not go on to complete four-year programs to increase their earnings substantially by completing the courses needed to obtain a certificate," the study's authors wrote.

Jacobson, of CNA (which is known for this kind of work because of its extensive experience crunching huge data systems for the military), said the study was not designed to argue that students should be directed toward more-practical certificate programs rather than the more academic liberal arts disciplines at community colleges.

"All we’re trying to do is find what C students can do most productively at the point they leave high school," he said. "The investments we’re currently making in the two-year-college system are extremely important, and the message that comes across very clearly is that too many students are leaving high school without having a terrific high school experience, then are going to community colleges and repeating some mistakes they've already made."

The experts who analyzed the Hudson study seemed most intrigued by the finding on certificates. Chester B. Finn, Jr., president of the Thomas B. Fordham Foundation, said that to people like him "who tend to focus only on degrees," the findings about the earnings value of community college certificates suggested "evidence that better information regarding postsecondary possibilities might boost the prospects of low-income students."

But that finding also raised significant questions and cautions. Thomas Bailey, the George and Abby O'Neill Professor of Economics and Education and director of the Community College Research Center at Columbia University Teachers College, said it was unfair to compare recipients of certificates -- which in many cases are a student's ultimate educational goal -- with those who've achieved associate degrees, particularly in fields such as the humanities.

Most students who end up with only an associate degree in English or comparable fields do so "either because they stumbled into it, didn't know what they would do, were misinformed, or didn't complete their goals," Bailey said. "There is very little return to a student who has an English associate degree, and that's it." The pool of people who get associate degrees in non-technical fields and don't go on to transfer to a four-year college, Bailey noted, is very small.

In many ways, the assembled experts said, the study's specific findings were less important than the promise that such data-driven studies hold for policy makers -- if they can get their hands on good longitudinal data like those from Florida. But that will be impossible unless more states -- often over the objections of college officials -- begin stitching together data from the elementary and secondary schools, postsecondary education systems, and work force agencies, said Georgetown's Carnevale.

Many private college officials, backed by leading Republican lawmakers, have blocked efforts to create a federal student records system, citing privacy concerns. But the Education Department has begun funding state efforts to build their own, and the stimulus package that Congress is now considering would contain as much as $250 million in additional funds for such efforts.


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