All taxpayers, even those who don’t attend college, help pay for state-run higher education. But taxpayers and students alike often don’t see a return on their investments. Many public colleges are plagued by low graduation rates, while graduates struggle to pay back loans with low salaries. Evaluating the success of public colleges through the earnings of past students can help remedy these issues.
The ways that most states currently measure school performance don’t show whether higher education funds are spent well. The most common performance measures for public higher education (enrollment, enrollment of certain demographics, attempted credit hours) measure the quantity, not the quality, of the education students receive. To capture both quantity and quality, these quantitative measures must be paired with student outcomes.
The most common student outcome measures are geared to show academic achievement — but that’s only part of the picture. Public college should be a pathway to financial freedom for students and growth for the state economy. Accordingly, schools should teach students to excel outside of an academic environment, which requires more than simply keeping them from dropping out. Retention statistics don’t cast light on the quality of what students are taught.
In fact, they might sometimes show the opposite: More freshmen might stay enrolled when offered less rigorous first-year coursework or when promised an easy sophomore year. And that’s not even considering whether the coursework is relevant to students’ future careers.
So too with graduation rates — an increase could be a sign of less rigorous program requirements, directing more students toward easier degrees, or accepting fewer students from disadvantaged backgrounds. Even an increased number of STEM graduates doesn’t necessarily mean that those STEM graduates will learn the skills employers demand and find well-paying jobs.
Post-college outcomes are a significantly better indicator of public education quality than academic outcomes because they focus on students’ lifetime success, not just students’ academic success. Some good options for post-college measures include job placements, students continuing their education, and earnings upon entering the workforce.
Of these, earnings are the best measure for how well schools are managing to increase economic opportunity for their students. Job placement numbers show whether students can find a job, but earnings capture the quality of that job. A high rate of students choosing to continue their education is a good sign, but it doesn’t capture whether their next degree will be financially worthwhile. A long-term earnings measure offers greater clarity.
Future earnings also show whether a college education is successfully contributing to filling open jobs and growing local economies. While states can and often do maintain a list of specific in-demand jobs, earnings can automatically do this in tandem with the job market. Salaries increase when in-demand jobs need to be filled and vice versa.
Earnings easily and accurately measure the value of taxpayer and student investments in public higher education. Nor does putting emphasis on earnings come at the expense of improvements in typical measures such as retention, graduation, and job placement because these generally lead to higher earnings.
The clear benefits of measuring earnings are leading more states to base public higher education funding on student earnings, soon to join states such as Texas, Florida, and California, which have already adopted similar systems. This year, the most comprehensive earnings-based funding reform was introduced by state Rep. Mike Henderson and state Sen. Karla Eslinger in Missouri, proposing a funding formula that would base a school’s share of state funding on earnings and enrollment, to be phased in over seven years.
There are a few details to consider when setting up earnings-based performance measures. First, states should measure the earnings of all the students who attended a school, not just those who graduated, so that schools have an incentive to help struggling students rather than encouraging them to drop out.
There should also be some measurement of low-income student earnings calculated separately from overall student earnings to make sure that schools aren’t leaving these students behind.
Shorter- and longer-term earnings after initial enrollment should be used to measure initial job placement as well as career growth. Including longer-term earnings also captures those who decide to go to graduate school. Earnings data should exclude people enrolled in another program and people not working so that life choices such as going to graduate school or becoming a stay-at-home parent don’t reflect poorly on schools.
And finally, when comparing earnings figures, similar schools should be considered together: technical colleges against technical colleges, large universities against large universities.
While state-specific tweaks are always necessary, earnings are the best primary measure for evaluating the quality of education at public colleges and universities. High earnings of past students reflect a public institution that is a good return on investment for both students and taxpayers.
Annie Bowers is a policy analyst at the Cicero Institute.
