Despite public debate about the return on investment offered by a bachelor’s degree, the share of recent high school graduates opting to pursue a four-year degree has remained above 40 percent for nearly 30 years.[1] And not without reason. An analysis of 2019 data by the Georgetown University Center on Education and the Workforce found that the median 40-year net present value of potential earnings was $864,000 for a bachelor’s degree versus $723,000 for an associate’s degree and $577,000 for a certificate program. Holders of four-year college degrees also experience lower rates of unemployment.[2]
But as the cost of college soars[3] and student loan debt mounts,[4] there’s growing evidence supporting the value of shorter educational pathways that lead to well-paying jobs. The same 2019 analysis by Georgetown University found that two-year associate’s degrees and training certificates were more valuable over a decade. These programs are also significantly more affordable. The College Board reported that average published tuition and fees for full-time in-district students at public two-year colleges nationally was $3,800 for the 2021–2022 academic year. Certificate programs often have the additional advantage of allowing students to move directly from the classroom to paid on-the-job training, further increasing the attractiveness of two-year colleges.
Students and employers both appear to be responding to this shift. Enrollment in vocational-focused community colleges climbed by more than 17 percent in Spring 2024 compared with the prior year, representing a gain of more than 6 percent over pre-pandemic levels.[5] In a tight labor market, more employers are voicing their intention to base hiring decisions on skills rather than requiring a specific degree. Employers from IBM to Walmart to the federal government have announced plans to move to a skills-based hiring approach.[6] The increasing alignment between student interest and employer demand underscores the need to prioritize skill-specific education and training.
As part of our talent practice, TIP has the opportunity to interact with a number of outstanding higher education institutions. Many of these schools have made great strides toward driving meaningful expansion of alternative postsecondary education in their communities. Two such institutions, Texas State Technical College and San Jacinto College, are addressing the Houston area’s demand for skilled labor through targeted education and training, enhanced by philanthropic and private industry support.
Texas State Technical College (TSTC), with its 11 campuses, offers more than 40 programs for certifications and associate’s degrees, most of which cost between $6,000 and $13,000. TSTC’s Fort Bend County campus in the city of Rosenberg saw a 20 percent increase in enrollment from the fall semester of 2022 through the fall of 2023, reflecting a demand for the college’s exciting investments in skill-specific training. Notably, in November 2023, TSTC broke ground on a $54 million facility expansion to construct an 80-acre Transportation Center of Excellence on the Fort Bend County campus, set to open in Fall 2025. In May 2024, TSTC celebrated the graduation of students earning the advanced technical certificate in the Automotive Tesla START program. Launched in 2021, the collaboration between TSTC and Tesla offers an intensive 16-week electric vehicle service training program (costing only $2,700) that leads directly to employment at the company. TSTC has excelled in its focus on specific industry training in the transportation sector, providing a clear pathway to attaining gainful employment.
San Jacinto College (SJC) is a designated Hispanic-Serving Institution operating in East Harris County, Texas. With over 30,000 students, SJC offers a wide range of technical degrees and certificates across more than 200 programs. In June 2021, the philanthropist and former wife of Amazon CEO Jeff Bezos, MacKenzie Scott, donated $30 million to SJC. The generous sum created a scholarship program that fully funded tuition at SJC for three years for every member of the Class of 2021 graduating from six Houston-area school districts. SJC has also benefited from significant private industry investment. In September 2019, the college announced the opening of the LyondellBasell Center For Petrochemical, Energy, & Technology. Located in the city of Pasadena, the $60 million, 151,000 square-foot facility is the largest petrochemical training facility in the Gulf Coast region, housing 35 training labs and modern conference space for industry training. The space is sustained by 17 private industry funding partners, including Siemens, Dow, and Shell. As recently as May 10, 2024, SJC announced a partnership with Opgal to offer optical gas imaging certification training. By leveraging the combined efforts of philanthropy and private industry investors, SJC is poised to strengthen hands-on training opportunities that prepare local students for employment in the energy sector at minimal cost.
Examples like TSTC and SJC highlight the importance of investing in diverse education options. Alternatives to the four-year degree can help economic developers ensure the local workforce meets the needs of current and potential employers, improve access to gainful employment through training with a good return on investment, and increase sources of external funding that mitigate costs and provide students with efficient training options.
[1] National Center for Education Statistics, Digest of Education Statistics 2023, Table 302.10. Recent high school completers include individuals ages 16 to 24 who graduated from high school or completed a GED or other high school equivalency credential.
[2] While those with bachelor’s degree are more likely to be employed, a recent Strada Foundation report found that 45 percent remain underemployed a decade after graduation, meaning they hold a job that typically does not require a four-year degree.
[3] A recent Wall Street Journal article cited a 180 percent rise in the real (inflation-adjusted) cost of a four-year degree between 1980 and 2020. Douglas Belkin, “Why Americans Have Lost Faith in the Value of College: Three generations of ‘college for all’ in the U.S. has left most families looking for alternatives.” Wall Street Journal, Jan. 19, 2024.
[4] According to a 2022 update prepared by the Federal Reserve Bank of New York, 21.4 percent of borrowers (representing 9.3 million people) owed more than $50,000 in student loans in 2022Q4.
[5] National Student Clearing house Research Center, “Current Term Enrollment Estimates: Spring 2024”, May 22, 2024, Figure 4.2 and associated summary.
[6] A February 2024 report published by the Burning Glass Institute throws some cold water on the skills-based hiring movement. Their analysis found that, while employers have in fact made progress in removing degree requirements from job postings, there has been little change in hiring practices.
