Where you live after attaining your degree also affects its value, according to the results of a May 2020 study for the Thomas B. Fordham Institute, a conservative nonprofit think tank.
“In general, college degrees are a good investment, but the return in terms of cosmopolitan areas is phenomenal,” says John Winters, associate professor of economics at Iowa State University, who conducted the study.
In cities, bachelor’s degree holders earn $95,229 on average, an 86.2% premium compared to a worker with a high school diploma and a 55.7% premium compared to an associate degree holder.
Winters says that’s primarily because cities have a higher concentration of jobs in fields that often demand workers have four-year degrees, such as tech, finance and marketing. Workers in these fields earn higher wages, which leads to a greater return on investment for degrees.
However, Winters’ findings also mean it’s less critical to have a four-year degree if you want to live in a smaller metro or rural area. Bachelor’s degree holders in nonurban areas have mean earnings of $67,893, which puts their wages at a 46.4% premium compared to high school diploma holders and a 29.6% premium compared to associate degree holders.
Degree attainment doesn’t guarantee equity
In some ways a college degree can exacerbate income and racial inequalities, such as student debt and ability to repay that debt, says Marshall Anthony Jr., a senior policy analyst at Center for American Progress, a public policy research organization.