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Data Show Community College Degrees Lead to Higher Earnings

By Sonya Stinson

Illinois Community College System graduates increase lifetime earnings by more than $500,000, study finds.

Some people need to be convinced that community college investments pay off for students and communities. Illinois’ community colleges now have plenty of state-specific data to back up that assertion.

A recent Illinois Community College Board (ICCB) study found that Illinois community college graduates can expect a lifetime earnings gain of more than $570,000 — or 44 percent — over workers in the state who don’t complete a community college degree or certificate.

Even completing a single community college course can improve earnings. Annual wages for Illinois community college students who completed coursework in fiscal year 2011 were 25.3 percent higher than what they took home before enrolling.

How ICCB gathered the data

ICCB contracted with Northern Illinois University’s Center for Governmental Studies to conduct the study, which was released in October 2014 and was paid for by a federal Statewide Longitudinal Systems grant. Researchers had access to the Illinois Department of Employment Security database, which allowed them to look at the actual earnings of community college students and graduates and match that information with employee-level wage data.

That access to hard data gave the ICCB study an edge over similar probes of economic impacts, says Nathan Wilson, ICCB’s senior director for research and policy studies. “I think [other studies] use assumptions … that are well established, but they don’t go through the rigor of actually using real student-level and employee-level data,” Wilson says.

The research team produced a statewide report and individual reports for each of Illinois’ 39 community college districts. “There’s more granular data that we gave to the individual community college districts that look at age distribution and programs’ specific outcomes,” Wilson says.

Documenting real return on investment

One fascinating piece of statewide data from the report shows that at 14.2 percent, the average annual rate of return for investing in community colleges beats the ROI of both the S&P 500 (9.3 percent) and the housing market (3.7 percent).

“When you talk about ROI, sometimes that can be a vague concept,” says Matt Berry, ICCB’s legislative and external affairs liaison. “That [ROI data] kind of helps to show that when we’re talking about Illinois community colleges, you really are getting a strong return, and the investment really does pay off.”

The study provides plenty of evidence that community colleges are powerful local economic engines. Some Illinois community colleges are the largest employers in their districts, and the state’s community colleges provide approximately 48,000 jobs.

Furthermore, community colleges are critical to maintaining the state’s workforce. The study revealed that 87 percent of Illinois community college students work in the state for at least five years post-graduation, and 74 percent of Illinois employers have hired a community college student within the past 12 years.

The results of the study have been kind of surprising to some people. The $570,000 lifetime earnings gain has gotten quite a bit of attention.

The combined direct and indirect economic impact of Illinois community colleges is roughly $3.1 billion, according to the ICCB study. Data points like that help convince even people with no direct connection to community colleges that financial support for these institutions is money well spent, Wilson says.

Berry says response to the report has been “overwhelmingly positive” among its wide-ranging intended audience: students, parents, employers, business and industry groups, elected officials and the community at large. State legislators in particular have long wanted to see empirical evidence of the economic value of higher education, Berry says.

“The results of the study have been kind of surprising to some people,” Berry says. “The $570,000 lifetime earnings gain has gotten quite a bit of attention.”

What evidence can you share that community college degrees in your state lead to higher earnings for graduates? Tell us in the Comments. 

Sonya Stinson

is a contributor to the 21st-Century Center.

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