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What You Learn At College Counts More Than Where

EDUCATION snobs may turn up their noses at the idea of going to a community college. But new research indicates that a student at a two-year college gets as good a return per year of education in higher earnings after leaving school as a student of a more prestigious, and probably more expensive, four-year university.

All higher education pays off. Even the 20 percent of the civilian labor force with only one to three years of college earn 15 percent more on average than high school graduates.

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According to economists Thomas Kane and Cecilia Rouse, the financial return for students of either a community college or four-year university earn approximately 8 to 9 percent more than high school graduates for every year of credits completed.

Moreover, those graduating with a bachelor degree from four-year institutions and those receiving an associate degree from community colleges do not earn significantly more than those with similar numbers of college credits and no degree. In other words, it is the course work, rather than the credentials, which count in subsequent earnings.

"Education is education," Mr. Kane says.

IN an older paper published in the American Economic Review, Nabeel Alsalam, a Department of Education statistician, and Estelle James, now a World Bank economist, found that for students of similar ability, future earnings do not depend on whether they go to the most selective universities, such as the Ivy League schools, or less selective schools.

"It doesn't really matter whether you can get into Harvard or not," Mr. Alsalam says. What does make a difference is whether a student chooses a lucrative field, say computer sciences or finance, versus a low-paid profession, such as education or the social sciences.

Harvard University's Kane and Princeton's Ms. Rouse, in a paper written for the National Bureau of Economic Research, note that an increasing proportion of high school graduates are seeking to improve their skills in the face of the rising wage inequality between those with high school education only and those with higher education. And about 50 percent of those entering college today do so at community colleges.

That percentage probably understates the importance of community colleges since they are "the port of entry for a disproportionate share of those marginal students most likely to be affected by state and federal financial aid policies," the economists write.

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To reach their conclusions, the authors use data from a national survey of the high school class of 1972 and from another national survey of high school graduates between 1976 and 1982.

The first survey sampled 22,652 seniors from the class of 1972, and surveyed most of them again in 1973, 1974, 1976, 1979, and 1986. School transcripts for about 14,000 sample members were obtained in 1984 for all post-secondary schools reported by the students through 1979 and include course credits by field, grades, and any degrees obtained.

One byproduct of this first survey was a finding that fake college credentials on average don't bring a financial reward. Some 626 individuals reported periods of enrolment in college for which the schools had no record of their attendance. These "liars" in regard to their education had wages no different from those of high school graduates alone, the authors found. So it is the actual course work - not the claim of education - which apparently boosts an individual's wages after leaving school.

The authors adjusted their findings by comparing high school graduates and those with a college education who have similar high school class ranks, standardized test scores, and family income. That calculation reduced the return on a year of college (either community or four-year) to about 5 percent on average. However, if adjustments are made for measurement error in credits, the return goes back up to around 8 or 9 percent.


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