High Costs and Low Earnings
With President Joe Biden’s plan to use up to $1 trillion in tax dollars to forgive student loans, there is no more meaningful time than now to look at how public colleges and universities are serving students and taxpayers. Thankfully, the U.S. Department of Education publishes data on colleges and programs and their financial impact, or in other words, what is the debt a student takes on to complete a unique program and what can a graduate expect to earn three years after graduation.
With this data, we looked at how well Tennessee public colleges and universities are serving students and taxpayers. In our most recent report, Higher Education and Higher Debts: Which College Degrees Cost More Than They’re Worth?, we uncovered 24 programs that leave students with a median debt that is higher than their median annual earnings, resulting in graduates that would have difficulty repaying their loans. The worst-performing program in the state was the bachelor’s degree in anthropology at Middle Tennessee State University. This program had median annual earnings of less than $22,000 with the median debt being over $38,000, meaning students were taking on 178 percent, or nearly two times the amount of debt for what the degree would bring them in annual earnings. Across the state, there were an additional 23 programs that left graduates with more debt than annual earnings.
On top of leaving graduates with mountains of debt compared to their earnings, taxpayers were also shouldering the cost for higher education and the support of these programs, with billions of tax dollars a year going to higher education. In the last decade, Tennessee taxpayers’ investment in higher education has increased 28 percent after inflation, far outpacing tuition, federal funds, or other sources of revenue. Surprisingly—or unsurprisingly—higher education is following the same trend we have witnessed in K-12 education, with decreasing enrollment and an increase in administrative and professional staff. While student numbers have decreased around 15 percent in the last decade, administrative/professional positions have seen a nearly 30 percent increase, and increases were also seen in the number of faculty on staff.
There was some good news, however, as the vast majority of programs do offer a positive return on investment for students. At public colleges and universities across Tennessee, 72 percent of programs offer less than 75 percent debt compared to earnings, meaning graduates are making more than their degree cost and debt repayments would be manageable. Obvious trends existed in the best-performing programs, with healthcare, engineering, and sciences taking top spots. Registered nursing (RN) associate degrees were especially beneficial to students, with four out of the top five programs being RN degrees. The best-performing program left nursing graduates with less than eight percent of debt compared to earnings, or median incomes of over $51,000 and debt is less than $4,000.
This data gives a clear choice for prospective students, university leadership, and state lawmakers. For prospective students, they can now see what they can reasonably expect to earn—and pay—for a degree. For university leadership, this gives them the information to address which programs are not serving students and taxpayers, and for them to take steps to address that. For lawmakers, they can use this information to better align state spending with programs that will actually benefit students as well as taxpayers.