Nondegree Credentials Yield Mixed Outcomes

The number of credentials offered in the U.S. has exploded in recent years—reaching more than 1.1 million, a 10 percent jump in the last year alone—as students question the value of traditional degrees and seek out shorter, more flexible options.

But while some programs boost workers’ incomes by thousands of dollars and help them switch careers or advance within their fields, others offer little opportunity for advancement and earn graduates no wage gains at all. And results vary widely, even in lucrative fields and among trusted providers.

That’s the conclusion of a new report from the American Enterprise Institute, a conservative think tank, and the Burning Glass Institute, which collects data on credentials and the workforce. Researchers also created a new web tool to complement the report, in the hopes of helping students and providers determine which programs do and don’t live up to the hype.

“People spend money and time trying to get these certificates in order to get more money, in order to get promoted, in order to change jobs,” said co-author Mark Schneider, a nonresident senior fellow at AEI. “And we have to be able to say to them, ‘These credentials have a higher probability of contributing to your well-being and your career and job growth than these other ones.’ It is really the underlying mission of this work.”

The report’s authors drew on the Burning Glass Institute’s database tracking millions of Americans’ career trajectories and took a close look at 23,444 credentials offered by more than 2,000 different providers. For each credential, they explored to what extent graduates met one of three goals, compared to similar workers in the same fields without these credentials: did they earn more, advance in their current jobs or successfully switch careers.

By all accounts, the results were mixed.

Only about 12 percent of nondegree credentials offered graduates significant wage gains of 10 percent or more that they wouldn’t have gotten otherwise compared to similar workers, according to the report. And just 18 percent of credential earners were likely to get any wage increases they wouldn’t have otherwise, leaving many paying for programs without the payoff. The report also found that few programs helped learners move up in their fields.

At the same time, the report found the right nondegree credential could be a major career boost. The top 10 percent of nondegree credentials offered an annual wage gain of almost $5,000 just one year later, increased the likelihood of a promotion seventeenfold and upped the chances of a successful career switch sixfold, according to the report.

The key question remains: How does a learner tell a good nondegree credential from a bad one?

The report suggests it isn’t easy.

Lacking ‘Traditional Measures’

It makes sense that nondegree credentials would be more useful for advancing in some fields than others, but the report found that, even within a particular field, the outcomes of nondegree programs varied significantly.

For example, in the top 10 percent of data science credentials, graduates annually earned $5,500 more than similar workers who didn’t earn the credentials. But for the bottom 10 percent of data science credentials, graduates saw no earnings increases at all. Wage gains similarly differed by thousands of dollars when comparing top and bottom credentials in other fields, including marketing, real estate, accounting and nursing.

Some credential providers also performed better than others, but even within a particular provider’s offerings, the report found a wide range of outcomes. Some programs by LinkedIn or Coursera showed no wage gains, while others yielded earnings increases of several thousand dollars. The same was true for highly respected universities. For example, Stanford University’s Data Science Foundations program was associated with annual wage gains of $4,200, but its project management certification showed weak outcomes for graduates.

Schneider said this dynamic makes it hard for students to pick the best programs that teach them skills employers will reward.

“If I buy a Mercedes, the odds are I’m going to get a good car,” he said. “I feel more confident” making that purchase. But when trusted brand names aren’t necessarily a marker of good outcomes, then “I don’t know that this particular credential is going pay off.” As a result, “we cannot use traditional measures” as a guarantee.

Whether students successfully switch careers or move up in existing careers also depends heavily on the program and provider. The report found that students who earned the top credentials in real estate were 34 percentage points more likely than their peers to switch to a real estate job, but for students earning the least successful 10 percent of real estate credentials, it was only a 5.5-percentage-point difference.

That’s why AEI and Burning Glass created a searchable website with a breakdown of the outcomes data for the thousands of nondegree credentials studied in the report. Users can search for a particular field or provider, or research a specific program to see how it compares to others in terms of wage gains, marketable skills or the likelihood of landing a new job or a promotion.

Matt Sigelman, president of the Burning Glass Institute, compared the tool to “nutrition labels” that tell users the key facts they’re likely to care about when searching for a program. The site also offers other information, such as how many people who earn a particular credential also hold a traditional degree, allowing users to see which programs generally supplement degrees or offer an alternative to them.

Sigelman hopes that both prospective students and providers use the data to delve into “how well programs are serving students, how they replicate successes and where they need to lean in to improve outcomes,” he said.