New Analysis: The Return on Invest of UHSE Awards

Ari Fenn, Assistant Commissioner, Research
June 28, 2024

A smal and large cairn in the foreground and trees in the background.
Photo by Markus Spiske on Unsplash

In February, UDRC announced the launch of our newest product, analytics briefs. Today, we publish our first analytics brief, which asks, “What is the return on investment (ROI) of a postsecondary award?” This analysis shows a positive return on investment for a postsecondary award. The positive ROI holds for both individuals and Utah as a whole.

The 2014 – 2016 graduating cohorts from the Utah System of Higher Education (USHE) were linked to Department of Workforce Services (DWS) wages records to calculate the ROI. This analysis covers those who earned a two-year certificate, an associate degree, and a bachelor’s degree. Pre-graduation wages are not representative of wages that one can earn without a postsecondary award due to the tradeoff between work time and school while one is earning an award. This led to the need to create a comparison group, those who attended at most one year at a USHE institution and left school the year preceding the graduation cohorts’ completion, 2013-2015.

Three different private returns are calculated along with public returns. First, the wages of USHE award earners the year before graduation are compared to their wages the year after graduation. Regardless of award type, mean and median wages are higher after completion than before completion. This comparison suffers from potentially deflated initial earnings, and the methodology for the five-year post-graduation ROI is different. Wages from the comparison group and the cohort of interest are used to calculate the five-year ROI. There is a positive ROI for mean and median wages for bachelor’s and associate degree holders five years after completion. For those who earned a certificate, the typical (median) graduate saw a positive ROI. However, at the mean, there was a marginally negative ROI (likely due to outliers at the low end).

Without accounting for costs, the difference in wages may not be enough to determine if an investment in a postsecondary award is worth it. The ROI is unequivocally positive after including the out-of-pocket costs of attendance at a postsecondary institution and the opportunity cost (forgone wages the same as those of the comparison cohort). The typical certificate earner breakeven after 2.8, 3.1 years for an associate earner, and 6.3 years for a bachelor’s earner (Figure 1). Additionally, 20-year cumulative wages are expected to be higher for award holders.

Figure 1: Cumulative median wages for the completion and comparison groups.

In addition to the returns to individuals who earned a USHE award, Utah benefits from the investment in a postsecondary award. The higher wages associated with those who earned the USHE awards led to increased expected tax revenue collected.

For a deeper dive into the results, an interactive data dashboard is available. For a more in-depth discussion of both the methodology and results, the full analytics brief, is available here