By Kritika Agarwal
A new study from the Brookings Institution shows that college remains a financially sound investment even after accounting for student loan repayments. The report found that, after accounting for debt, degree holders earned, on average, $8,000 more per year than those who did not complete a degree. Without accounting for debt, college degree holders earned $10,400 more per year than those without a degree.
The report’s findings are consistent with previous studies that have shown that a college degree provides a solid rate of return for most students. For example, a study by the Federal Reserve Bank of New York earlier this year showed that a college education offers a 12.5% rate of return for the typical graduate.
The Brookings Institution’s analysis comes at a time when lawmakers and members of the public are increasingly skeptical of the value of a college degree. Rising costs and debt loads on students are often cited as reasons for questioning the worth of a college education.
However, despite public perceptions, the out-of-pocket costs of a college education have actually declined for most students and their families. A new analysis by the College Board found that net tuition and fees (i.e. what students and their families paid for college after accounting for grant aid) for first-time, full-time students was $2,300 at a four-year public institution and $16,910 at a private nonprofit four-year institution for the 2025-26 academic year. According to the College Board, net tuition and fees for students at public four-year institutions peaked in 2012-13 and at private nonprofit four-year institutions in 2006-07.
The Brookings Institution analysis found that “more education generally leads to a bigger paycheck.” While graduates with master’s degrees spent more of their extra earnings servicing their debts, those degrees also provided “the highest average earnings and gross earnings premium, followed by bachelor’s degrees and then associate’s degrees.”
Based on their research results, the authors of the study suggested that “policymakers should consider maintaining, and, in some cases, expanding student loan opportunities, because debt-adjusted earnings are substantially higher when one completes postsecondary education.”
However, recent congressional bills and regulations are making it harder for students to access loans for college education. As Brookings pointed out, the H.R.1 reconciliation bill passed by Congress earlier this year has instituted “borrowing caps on federal loans for graduate and professional degree programs – perhaps the borrowers most poised to fully pay back their loans” and expanded provisions that would “eliminate access to federal student aid for degree programs in all colleges and universities whose graduates fail to earn more than non-graduates’ median earnings.” The bill also replaced existing income-driven repayment plans with one plan that has a longer repayment period.
Colleges and universities continue to strive to improve access and affordability so all Americans can benefit from the return on investment on a college education. Many AAU members are now tuition-free for students from low- and middle-income families. Colleges and universities are also engaged in numerous efforts to increase retention and graduation rates, make the transfer process easier, and improve transparency and clarity around the cost of college and student financial aid offers.
While colleges can and should do more, skepticism about a college education should not deter Americans from pursuing a degree and reaping its benefits.
Kritika Agarwal is assistant vice president for communications at AAU.