New Study Provides Insight into the Value of a California College Degree

Nathan Reyes resides with his family close to Cal State Los Angeles, where he’s practically attending college for free to obtain a bachelor’s degree that typically yields graduates an annual salary of $62,000 within five years of graduation.

He’s just one of the many low-income students in California who choose to enroll in colleges that, due to their affordability, equate to only a few months’ salary that students earn shortly after completing their degrees.

A fresh report released today examines California’s colleges, assessing the time it takes for low- and moderate-income students to recover the costs of earning a college degree. This study reveals that public institutions, including many community colleges, Cal States, and University of California campuses, offer better returns on investment compared to most nonprofit private colleges and for-profit institutions.

Reyes’ expenses are minimal, limited to car maintenance, fuel, a few textbooks, and contributing to his family’s housing expenses. As a third-year student, he managed to cover his expenses without the need for loans.

“Feeling fortunate,” Reyes, a communications major, remarked, “I used to worry about accumulating debt in high school, but now in my third year, that’s no longer a concern.”

Having received state grants and federal aid for his academic and living expenses, Reyes, a 20-year-old student, also participates in a state volunteer program that offers a stipend to students.

The report delves into various facets, blending the net price of a college degree after financial aid, the average earnings a decade post-enrollment, and the income disparity compared to high school graduates. It defines low- to moderate-income households as those earning below $75,000 annually.

Based on the federal data, students at Cal State San Bernardino recoup their degree costs in less than three months, given the low expenses incurred by low-income students, amounting to around $5,000 over four years, whereas their post-graduation annual earnings reach approximately $53,000.

Similarly, at Cal State Los Angeles, the time it takes to recover the net degree costs represents less than three months of post-college average annual income.

“This signifies a groundbreaking approach,” noted Michael Itzkowitz, the report’s author, who spearheaded the first federal consumer tool for comparing college costs under the Obama administration. It provides a quantifiable way to showcase the economic value conferred by colleges beyond a high school diploma.

A CalMatters analysis of the data revealed that students typically need around two years to recover their costs at public institutions and just over three years at nonprofit private colleges in California.

While certain for-profit colleges yield high returns on investment, the majority do not, requiring nearly 13 years for students to recoup their expenses. Numerous for-profit institutions have faced legal action for deceptive practices and have shown no return on investment, with nearly a quarter of California colleges, including two small nonprofit private colleges, demonstrating similar outcomes.

Most California for-profit colleges primarily offer certificates, which lack the long-term economic benefits associated with bachelor’s degrees.

Approximately 79% of California institutions allow low- and moderate-income students to recuperate their costs within five years or less. For nearly a third of campuses, this recovery period is less than a year.

While the actual degree costs may surpass today’s published data for many students, the general trend remains unchanged. The combination of state and federal financial aid at public institutions and the higher wages offered with a college degree reinforces the value of investing in higher education.