Minimum economic return

Definition

Individuals earn enough after completing their education to recover the costs of their investment.

RECOMMENDED METRIC(S)

Percentage of individuals that earn at least as much as the median high school graduate in their state plus enough to recoup their total net price plus interest within 10 years of completing their highest degree or leaving education (high school, postsecondary education, or workforce training)

Type(s) of Data Needed

Administrative data

Why it matters

Although postsecondary education represents an important pathway to economic mobility, it requires a significant financial investment. If institutions fail to deliver a minimum economic return to students, individuals are at higher risk for defaulting on loans, which has meaningful consequences and creates barriers to wealth building that are difficult to overcome. Analyses by the Postsecondary Value Commission show that a number of institutions do not equitably deliver economic value. For example, private for-profit institutions, which disproportionately serve students from low-income households, are less likely to deliver a minimum economic return than their public and private nonprofit counterparts. Furthermore, institutions with higher shares of White students are more likely to deliver a minimum economic return, whereas the opposite is true for institutions with higher shares of Black and Indigenous students and Pell Grant recipients. However, disaggregated thresholds should be used when assessing these populations’ earnings to account for labor market discrimination.

What to know about measurement

This metric can be estimated at the institutional level for postsecondary institutions using College Scorecard data. Both secondary and postsecondary institutions can measure it at the individual level if they collect or can link necessary earnings data for their graduates. For example, the University of Texas system publishes median loan debt and median earnings at 1, 5, and 10 years after graduation by degree level, linking student records to earnings data from the Texas Workforce Commission. Measuring this indicator at the individual level requires linking data from the K–12, postsecondary, and workforce sectors, which states can do through their longitudinal data systems. We recommend this indicator be measured among high school graduates and workforce training completers as well because not all individuals pursue or complete postsecondary education. Further, this indicator should be measured among non-completers, as some students may enroll in a training or postsecondary program but not graduate and still carry student debt with them.

Source frameworks

This indicator appeared in two source frameworks reviewed for this report. Our proposed measure draws on work by the Postsecondary Value Commission. In the Postsecondary Value Framework, this measure is described as “Threshold 0,” indicating the minimum economic return individuals should obtain from their postsecondary education to enable future economic mobility and security.

Indicator: Minimum economic return