Does Earning a College Degree Still Pay Off in Today’s Economy?

Mejia, Wigul, Hsieh, and Johnson (2026) examined whether the benefits of earning a college degree outweigh the costs for California students. They drew on labor market, higher education, financial aid, and student debt data from California and national sources to compare earnings, employment outcomes, college costs, and borrowing patterns across educational levels. They found that college graduates earn substantially more than non-graduates, with bachelor’s degree holders earning a median annual wage of $96,000—about twice the median wage of high school graduates. They also found that 78% of graduates achieve a positive return on investment within ten years, while graduates experience stronger employment outcomes, better job benefits, and lower poverty rates overall.

Why This Article Was Selected for The Policy Scientist

Higher education remains one of the most consequential public policy issues because it influences workforce development, economic mobility, tax capacity, labor market productivity, and long-term social outcomes. This report is particularly timely as rising tuition prices, student debt concerns, and public skepticism about the value of a degree have intensified. Mejia, Johnson, and their colleagues have produced a substantial body of research on higher education in California, making this report a useful synthesis of an extensive research agenda. The study draws on high-quality administrative, labor market, and higher education data, and its findings are likely relevant to many states facing similar workforce demands. As a descriptive policy analysis, it provides valuable evidence on returns to education. However, it does not employ causal inference methods or randomized designs, so future research using stronger causal approaches would strengthen confidence about the extent to which college itself produces the observed outcomes rather than reflecting differences among those who attend and complete college.

Full Citation and Link to Article

Mejia, M. C., Wigul, C., Hsieh, V., & Johnson, H. (2026, April 8). Is college worth it? Public Policy Institute of California. https://www.ppic.org/publication/is-college-worth-it/

Central Research Question

This PPIC explainer examines a question that has become increasingly prominent in public discourse: whether the benefits of earning a college degree outweigh the costs. The authors seek to assess the economic value of higher education in California by comparing earnings, employment outcomes, debt burdens, and broader social benefits associated with college attainment. They also investigate how the return on a college degree varies across individuals, majors, and demographic groups. Given rising tuition prices, concerns about student debt, and skepticism regarding higher education’s value, the report aims to provide an evidence-based assessment of whether college remains a worthwhile investment for most students.

Previous Literature

The report builds upon a large body of research documenting the “college wage premium,” the persistent earnings advantage enjoyed by individuals with bachelor’s degrees relative to those with lower levels of educational attainment. Prior studies have consistently found that college graduates earn substantially more over their lifetimes than high school graduates and experience better labor market outcomes. Research has also demonstrated that educational attainment is associated with lower poverty rates, improved health outcomes, higher rates of civic participation, and greater intergenerational mobility.

The authors situate their analysis within ongoing debates regarding whether the traditional economic returns to college have weakened as tuition costs have increased. Recent public discussions have focused on student debt, underemployment among recent graduates, and variation in returns across academic majors. The report extends this literature by synthesizing contemporary evidence from California, a state with one of the largest and most diverse higher education systems in the world. The authors also address questions regarding affordability, debt burdens, completion rates, and labor market disparities that have become central topics in higher education policy discussions.

Data

The report draws upon multiple administrative, labor market, and higher education datasets. These include wage and employment information for California workers, institutional data from colleges and universities, financial aid and student borrowing records, and educational attainment statistics. The analysis incorporates data from the University of California (UC), California State University (CSU), California Community Colleges (CCC), private nonprofit institutions, and for-profit colleges.

The data allow the authors to compare earnings across educational attainment levels, assess borrowing patterns, estimate college costs after financial aid, and examine labor market outcomes by major, gender, and race. Most earnings analyses focus on full-time, year-round workers between the ages of 25 and 64. Cost analyses incorporate both published tuition prices and net costs after grants and scholarships. The report also includes information on loan repayment, delinquency, default rates, labor force participation, unemployment, and job benefits.

One of the strengths of the report is its reliance on large-scale administrative and survey data covering broad populations rather than narrow samples. This approach provides substantial external validity and allows the authors to describe statewide patterns with a high degree of confidence.

Methods

The report primarily employs descriptive statistical analysis rather than causal inference methods. The authors compare outcomes across educational groups and present distributions of earnings, costs, debt burdens, and employment characteristics. They summarize observed differences between college graduates and non-graduates and examine how these differences vary across age groups, academic majors, and demographic categories.

The analysis does not utilize randomized controlled trials, natural experiments, instrumental variables, regression discontinuity designs, difference-in-differences models, or other contemporary causal inference approaches. Consequently, the report should be interpreted as documenting associations rather than establishing definitive causal relationships. While the observed patterns are generally consistent with the broader literature on educational returns, some portion of the differences between graduates and non-graduates may reflect underlying differences in ability, motivation, family background, or other factors that influence both educational attainment and labor market outcomes.

Nevertheless, the descriptive approach is appropriate for the report’s purpose as a policy explainer. The authors focus on presenting accessible evidence regarding costs, benefits, and outcomes rather than estimating precise causal effects. Future research employing stronger causal identification strategies could further clarify the extent to which the observed returns are directly attributable to obtaining a college degree.

Findings/Size Effects

The report’s central finding is that college graduates continue to experience substantial economic advantages relative to individuals whose education ended with high school. California workers holding bachelor’s degrees earn a median annual wage of approximately $96,000, which is roughly twice the median wage earned by high school graduates. Only about 12 percent of workers whose highest educational attainment is a high school diploma earn wages equal to or greater than the median earnings of bachelor’s degree holders.

The earnings advantage associated with college increases over the course of a career. The wage premium rises from approximately 69 percent among workers ages 22 to 27 to roughly 120 percent among workers ages 45 to 54. This finding suggests that much of the economic value of higher education accumulates over time as graduates gain experience and advance into higher-paying occupations.

The report also finds that most college graduates ultimately realize positive financial returns. Approximately 78 percent of graduates achieve a positive return on investment within ten years of graduation, and nearly all graduates do so over the course of their working lives. Although some graduates initially experience underemployment, most eventually transition into occupations offering stronger wage growth and greater career advancement opportunities.

The benefits extend beyond wages alone. College graduates are more likely to participate in the labor force, less likely to be unemployed, and more likely to work full time. They also have greater access to employer-sponsored benefits such as health insurance, paid vacation, and retirement plans. These forms of compensation contribute to greater long-term economic security.

The authors challenge common perceptions regarding college affordability by emphasizing the difference between sticker prices and actual costs. In 2023, average net costs at CSU campuses were approximately $10,100 annually, representing a 70 percent reduction from published prices. At UC campuses, average net costs were approximately $15,700, or 59 percent below sticker prices. Inflation-adjusted net costs at both systems were roughly 20 percent lower than they had been in 2015.

The report identifies living expenses as a major component of college costs. Food and housing account for 41 percent of total costs at UC campuses and 56 percent at CSU campuses. Consequently, affordability concerns increasingly reflect broader housing and cost-of-living pressures rather than tuition alone.

Student borrowing patterns also differ substantially across sectors. Only about 27 percent of California university students borrowed in 2023–24, compared to 41 percent nationally. Public university students were less likely to borrow and typically accumulated less debt than students attending private nonprofit or for-profit institutions.

Completion emerges as another critical factor. Students who leave college without earning a degree experience weaker labor market outcomes and higher rates of loan delinquency and default. Three years after attendance, 22 percent of non-completers have loans in delinquency or default compared to only 8 percent of graduates.

The report further demonstrates substantial variation across academic majors. Computer science graduates earned median annual wages of approximately $130,000 in 2024, compared with $65,000 among education graduates. Significant earnings variation also exists within majors, reflecting differences in occupations, industries, and career trajectories.

Conclusion

The report concludes that college remains a strong economic investment for most California students despite rising concerns regarding affordability and student debt. College graduates earn substantially more, experience stronger labor market outcomes, and enjoy greater access to employment benefits than non-graduates. Although costs remain significant, financial aid substantially reduces net prices at public institutions, and most graduates ultimately realize positive returns on their educational investments.

The authors also emphasize that important challenges remain. Educational attainment continues to vary across demographic groups, completion rates remain lower for many disadvantaged students, and substantial earnings differences persist across majors and occupations. Nevertheless, the evidence presented suggests that higher education continues to play a central role in workforce development, economic mobility, and long-term labor market success. The report argues that improving affordability, strengthening pathways to degree completion, and enhancing information about educational and career outcomes will remain important policy considerations as demand for highly educated workers continues to grow.