The Hamilton Project, an economic policy initiative launched in 2006 by public policy think-tank The Brookings Institution, released a study last month that is particularly insightful, as it offers further supporting evidence for one of our core arguments against the DOE’s Gainful Employment rule.
Entitled “Major Decisions: Graduates’ Earnings Growth and Debt Repayment”, the study provides an analysis on graduates’ earnings growth and debt repayment in the early-career years. As we have previously pointed out here and here, the GE rule’s requirement that earnings data be scrutinized as early as 18-30 months after graduation in order to assess students’ ability to repay their student loan debt, is unrealistic and illogical, as this time period can hardly be considered a reliable indicator for earnings during one’s professional life.
In fact, The Hamilton Project’s study echoes exactly that – finding that graduates across all majors often experience steep earnings growth in the first five years after earning a degree, with an average increase of 65 percent. Furthermore, the study shows that graduates from majors with lower initial earnings are more likely to see faster earnings growth in early-career years – some of which showed increases of over 100 percent in the first five years after receiving their degree. Accordingly, as the analysis so astutely states:
“The higher earnings that come with a college degree do not always occur immediately after graduation. While lifetime earnings are higher for the more educated, early-career earnings can be relatively low, especially for a select group of majors…[t]his implies that a focus on earnings right out of school – either as an indicator of earnings potential or loan repayment ability – can be misleading.”
We couldn’t agree more. What is also telling is that the earnings presented in Hamilton’s analysis include both full- and part-time workers, as well as those who experience unemployment throughout the year.
It is time that the Department take such studies – which are grounded in factual, sound analyses of comprehensive data – seriously, instead of arbitrarily choosing metrics that increasingly seem to point to a predetermined goal. After all, this isn’t the only study or analysis to produce such findings and shed light on the incongruous, counterintuitive nature of a rule that would base the economic value of graduates’ education on such short-term earnings.