Washington, D.C. – National and state policymakers face numerous challenges as they develop strategies to measure the economic success of college graduates in order to better inform students and parents. The Education Policy Center at the American Institutes for Research (AIR) has issued a brief, Measuring the Economic Success of College Graduates: Lessons From the Field, offering insights on key approaches officials need to consider.
The brief was written by Dr. Mark Schneider, an AIR vice president and Institute Fellow, and draws upon his experiences as president of College Measures, which works with states to use data—including state Unemployment Insurance (UI) data—to provide information that helps students and parents make informed decisions about selecting a college and a major.
Examples of the insights offered in the brief include:
School-level reporting isn’t enough.
The best reporting schemes evaluate wage outcomes at the program level within an institution. It might be interesting to learn that graduates from “State University” make more, on average, than those from “Small State College,” but the information has limited value. Students graduating from different academic programs at the same university have widely different success in the labor market. English majors, for example, are almost always paid less than economics graduates from the same university.
When possible, report both short-term and long-term wage outcomes.
Most graduates’ loans enter repayment six months after leaving college, and their early career earnings will affect their ability to meet those financial obligations. But a longer view can provide important information about fields of study where economic returns may take longer to develop, such as philosophy or the performing arts. States like Florida, Texas and Virginia have been matching data sources for several years, providing information about graduates’ wage outcomes five—or even 10—years after graduation.
In addition to reporting on wages, report on students’ loan debt at completion.
How debt affects a specific graduate can only be understood within the context of her or his earnings. A graduate with $25,000 in debt and $65,000 in earnings is in a far different situation than a graduate with $65,000 in debt and $25,000 in earnings. As is currently done in Virginia and Texas, states should gather program-level debt per graduate, presenting data about indebtedness alongside information about wage outcomes.
Be transparent about who is and isn’t included in recent graduates’ wage reports.
Although UI data on average covers about 90 percent of the civilian workforce, significant numbers of workers are not included. Not covered, for example, are graduates who work for religious organizations or who are paid primarily on commission. Similarly, graduates in the military or working for federal agencies are not covered by state UI systems. Some states, like Texas, do gather data for large classes of federal workers and collect wage data through national databases from the Office of Personnel Management, U.S. Postal Service, and Department of Defense (military service records). But other states do not have such arrangements.
Use medians, not averages, when reporting wages and student debt.
In general, it is preferable to report median wage or indebtedness rather than the average. A distribution’s median, which reflects the point in that distribution where half of the observations fall above it and half of the observation fall below, is not sensitive to extreme values. Averages, on the other hand, can be highly sensitive to so-called “outliers.” One highly successful graduate will inflate the average, especially of a small program, while having little effect on the median.
Established in 1946, with headquarters in Washington, D.C., the American Institutes for Research (AIR) is a nonpartisan, not-for-profit organization that conducts behavioral and social science research and delivers technical assistance both domestically and internationally in the areas of health, education, and workforce productivity. For more information, visit www.air.org.