Recent higher education accountability policies and proposals have often linked programs’ or institutions’ federal aid access to students’ postcompletion earnings. For example, the gainful employment rule requires career-focused programs to lead to earnings greater than those of a worker with only a high school diploma. But proposals often differ regarding when to measure earnings. To inform policies that measure earnings after students complete a credential, I examine average earnings trajectories for 25 years after graduation for associate’s, bachelor’s, master’s, and professional degrees.

Why This Matters

An accountability policy that measures earnings too early after students leave school might be using a measurement that is not representative of a credential’s true value, but waiting too long to measure earnings could allow poor-performing programs to continue operating for several years while producing inadequate outcomes. Student loan borrowers are also increasingly using income-driven repayment plans, which leads to closer links between earnings trajectories and how long it takes for students to pay down their debts. For these reasons, policymakers may want to know how fast earnings typically grow and when in an individual’s career earnings growth rates change.

Key Takeaways

• Earnings growth is typically high during the initial years after graduation, particularly for bachelor’s and professional degrees, where growth nears or exceeds 10 percent annually in real terms.
• Earnings growth slows considerably between years 6 and 10, except for graduates from professional degree programs, whose earnings continue to grow rapidly through the first 10 years.
• Master’s degree holders appear to have the most consistent earnings growth of the credentials in this analysis. Earnings grow no more than 6 percent annually in each of the first 25 years after graduation.

Effects of an accountability policy that measures earnings after graduation can be sensitive to which year is chosen for measurement, particularly for bachelor’s and professional degrees. Because professional degree holders continue to see rapid growth for 10 years, effects of a policy could vary dramatically for professional degrees depending on which of the first 10 years is chosen for measurement.

How I Did It

I compare average earnings in the College Scorecard and American Community Survey for the first 5 years after graduation and then extend the analysis in the American Community Survey for the following 20 years. These earnings represent a snapshot of individuals of different ages rather than earnings over time for a single cohort. For undergraduates, I analyze associate’s and bachelor’s degree earners, and for graduates, I analyze master’s and professional degree earners.