What’s the Connection Between Degree Level and Salary?

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There is indeed a direct connection between your degree level and what you stand to earn in your career. This should come as comforting news whether you’re helping your kid navigate the  college application process, you’re a working professional planning to pursue an advanced degree, or you’re just looking for a silver lining to go with your monthly student loan repayment expenses. How far you go in pursuit of an education does have a direct relationship with your salary potential.

There are some mitigating factors that can complicate this relationship. For instance, earnings may vary based on geography, career path, and—as the data disappointingly and persistently shows—gender. There are also dramatic anecdotal outliers like billionaire high school dropout Richard Branson and Harvard non-finisher Bill Gates that defy the trend connecting educational attainment with earning potential.

But from a distance, the numbers tell a fairly decisive story—the higher your educational attainment, the better your opportunities for earning a robust salary and achieving longterm career stability.

What is the relationship between education level and earnings?

Considering even an out-of-state education at a four-year public school will cost you the equivalent of a mortgage for a small house, it would be nice to know that all that money is netting you a worthy return on your investment. Fortunately, there’s compelling evidence this is actually the case. As the Bureau of Labor Statistics cheerfully asserts, “the more you learn, the more you earn.”

This is more than just a cute platitude, though. Students with the highest levels of degree attainment earned more than three times what those with the lowest level of degree attainment earned in 2017. And there is clear evidence that earning power improves at each rung of the educational ladder as you climb your way to a terminal degree. The Bureau of Labor Statistics charts the median weekly earnings for all working American adults over the age of 25 and shows a direct and positive correlation between degree level and take-home pay.  

The same positive correlation applies to employment rate as well. Those with the most advanced degrees are the least likely working Americans to face unemployment, says the BLS. So in a broad sense, if you’re wondering whether there’s value in earning a degree, the answer is probably yes. 

Wherever you are on your educational journey—graduating from high school, completing college, or pursuing an advanced degree—you are adding a credential to your resume, refining your approach to learning, growing your knowledge, expanding your skill sets, narrowing your focus to more specialized applications, and of course, meeting new people.

The more time, effort and, yes, money, that you dedicate to these pursuits, the more you multiply your opportunities, like qualifying for specialized roles, advancing into leadership positions, connecting with other like-minded talents, and perhaps even possessing the professional acumen, communication skills, and sheer economic value to negotiate for higher pay.

All of this to say that your degree level can open doors, and the education you gain on the way to each degree can help you walk through each of these doors. Still, the question remains, on a more personal level, how will educational attainment affect your earning potential?

Well, the value in your pursuit of a degree will depend on a number of factors including your career goals, your industry, and the actual cost of the degree you’ll pursue. Ultimately, getting a good return on your investment will depend on how directly a specific degree program connects to your professional outlook. 

So let’s zoom in for a closer look at how each level of degree attainment can impact your salary potential…

Is it worth getting a high school degree?

Getting a high school degree is a worthwhile investment for literally everybody. Let’s consider a few basic facts first. A public high school education is free! Well, it’s not exactly free. The taxpayer foots the bill, which is to say that you’re already paying for a public education whether you choose to go or not. So the smart move is to complete your high school education and get a diploma, no matter what field you plan on entering. In lieu of actually attending and graduating from high school, earning a GED should net you the same outcome. 

And what is the outcome? According to the Bureau of Labor Statistics, in 2017, working Americans with less than a high school diploma earned a median income of $520 a week, whereas those with a high school diploma earned $712 a week. So even for students who will subsequently pursue technical certifications or vocational training, high school is a pretty good deal. Invest the time and effort in procuring at least a high school diploma or GED, regardless of whether your next step is toward a college campus or directly into your intended profession.

Is it worth getting a college degree?

In the simplest terms, yes, it is worth getting a college degree. Evidence shows that a four-year degree will significantly improve one’s earning potential, and in most cases, that earning potential will be sufficient to justify the expense of a college education. 

Granted, this is a subject that has received a fair amount of scrutiny in recent years, and deservedly so. After all, the average cost for a four-year college education has skyrocketed by nearly 500% between the 1985-86 and the 2017-18 school years. This increase is more than double the rate of inflation for that same duration. Across most industries, wages have either stagnated, or at best, have simply failed to keep up with the ever growing cost of a college education.

So there is a rational cause to reconsider the true value of a college education. Is it really worth all of that time and money? Well, the truth is that before you can really answer this question for yourself, you must consider the extremely broad spectrum of possibilities for what a college education might cost. 

Again, whereas high school costs nothing, college will cost you something. And depending on where you go, that something can be an absolutely massive sum. So when you calculate the return on your investment, you have a lot of personal variables to consider from your access to grants, financial aid and scholarships to the salary potential built into your field to the type of college you wish to attend. 

All of these factors can determine whether you’ll be paying a little over $9000 per year—the approximate in-state cost for tuition at a four-year public college; $27,000+ per year—the approximate cost of tuition for out-of-state public collegians; or $37,000+ per year, the approximate price for one year of tuition at a private college or university. 

Bear in mind that these figures don’t include room and board, nor do they really hint at the extravagant price tag for one year at an elite college like Brown ($62K+), Columbia ($63K+) or the University of Pennsylvania ($61K+).

All of this to say that when you calculate your potential return on investment in a college education, remember that your costs may vary widely. There are a lot of possibilities when it comes to where you go, how much you spend, and how directly your cost connects to your career prospects. So as you consider the figures below, remember that everybody’s economic inputs (tuition rate, financial aid, career-specific salary potential, student loan debt, etc.) will differ significantly.

That said, the overarching salary figures tell a significant part of the story here. In 2017, working Americans with a bachelor’s degree earned a median weekly pay of $1173. Not only does this salary potential far exceed that of the average high school graduate, but the wage premium is nearly just as high when compared to those who pursue some college education without graduating ($774 median weekly pay) and even as compared to those who completed their studies with an associate degree ($836 median weekly pay).

From this perspective, getting a college degree is clearly worth it, but all evidence suggests the only real way to get a return on your investment is to pursue your undergraduate studies all the way up to the completion of a four-year degree. Given the extremely modest wage differential between high school graduates and those with an associate degree or an incomplete college education, anything less than a fully accredited bachelor’s degree would be a waste of your time and money. 

This is not to undermine the value of an associate degree. If this is the minimum threshold for entry into your profession, the simple need for this credential supersedes questions of salary potential. Moreover, this is an excellent and affordable way to accumulate 60 credits before transferring into an inevitably more expensive four-year school for your bachelor’s degree. Key point: when it comes to college, the economic value is, to an extent, all or nothing. If you’ve accumulated some college degrees but have lapsed in attendance, evidence suggests there is significant financial value in going back to complete your remaining credits. 

As far as what you spend on those credits, the long and short is that your career goals should dictate how much you’re willing to spend on college. While college graduates earn more across the board, the variation on what you could earn according to your chosen field is enormous: Accountants and Auditors earned $73,560 in 2020; Financial Analysts earned $83,660; and Business Executives earned $107,680 in the same year. In spite of the wide spectrum in earning potential, each shares the same basic bachelor’s degree threshold. 

If you’re calculating the likely return on your investment, familiarize yourself with the financial outlook that awaits you in your chosen field. 

Is it worth getting an advanced degree?

The advice directly above applies with even more urgency when it comes to an advanced degree. Whether you should attend (and spend the money on) graduate school hinges very much on your career path and desired role. Once again, with each level of educational attainment, your earning potential goes up in a general sense. The BLS reports that those with a master’s degree earned a median weekly pay of  $1401 in 2017. Those with a doctorate degree did even better, earning $1743 per week.

But once again, there are a lot of factors to consider before you can determine the value of an advanced degree (or multiple advanced degrees) for you. We should acknowledge that the question of value is complicated by the fact that certain occupations simply require an advanced degree as a basic credential but may not necessarily reward that degree with higher pay. Instead, it is simply required that one earn an advanced degree in order to practice a given profession. For instance, School and Career Counselors earned a median annual salary of $58,120 in 2020. The median annual salary for a licensed social worker was $51,760 as of 2020.

While these pay rates are considerably lower than each of the career specific paths highlighted in the section above on college degrees, earning a license in each of these professions simply requires a master’s degree at a minimum. In other words, in some cases, the value in your advanced degree is based on necessity rather than earning potential. Therefore, if your career goals dictate that the master’s degree is a basic requirement, it will be worth obtaining regardless of its connection to salary potential. Still, this is something you should bear in mind as you determine how much you’re willing to spend on a master’s degree.

By contrast, for all professionals who view an advanced degree as an optional way to improve career prospects, it would be wise to measure the cost of your advanced degree against the wage premium it would likely create in your particular field. Note that, according to Education Data the average cost of a Master’s degree is $66,340. The same source reports that the average cost of a Doctorate degree is $114,300.

If you’re pursuing an advanced degree in order to make more money, be certain that it will actually allow you to do so. This can be your pathway to executive leadership, post-secondary professorship, professional research, and a host of other specialized opportunities where salaries are generally high. Or, it could be your pathway to even more student debt in a field where your earnings are almost identical to what they were after you graduated college. 

Determine whether yours is an industry, sector, or organization that places real monetary value on an advanced degree. If this isn’t the case, continuing to accumulate real-world experience may be just as valuable…perhaps even more so.

So what does this mean for you?

This logic applies at every level of education. Whoever you are, and wherever you are in your professional and educational journey, it matters what you plan to do with your degree. A college degree can be expensive. Add on another fortune if you’re pursuing an advanced degree or two. 

Chances are that you will reap some financial benefits from this investment as you advance in your profession. But it does matter how you make this investment. There is clear and empirical value in educational attainment, but you must choose wisely, and even more importantly, you must choose what is best for you