CERP3 contributors: Jason Jabbari and Yung Chun.
Zhang, Guangli and Jabbari, Jason and Despard, Mathieu and Mei, Xueying and Chun, Yung and Roll, Stephen, Beyond Earnings Premia: Debt-Adjusted Returns to Postsecondary Education (August 01, 2025). Available at SSRN: https://ssrn.com/abstract=5375794 or http://dx.doi.org/10.2139/ssrn.5375794
The rising burden of student debt calls for a reassessment of the economic returns to postsecondary education. This study estimates net returns to a range of educational credentials by integrating actual student loan payments into post-completion earnings. Leveraging linked administrative data on postsecondary enrollment and credit records, we examine outcomes for over 22,000 individuals. Using a matched difference-in-differences framework, pairing degree completers with non-completers from the same institution’s metropolitan area, major, and enrollment cohort, we estimate the causal impact of credential completion on earnings net of student loan payments. We define loan-adjusted income as gross annual earnings minus observed student loan payments. On average, loan payments account for 23% of gross earnings premium in the years following completion, though this burden declines over time. Despite these costs, we find that postsecondary credentials yield substantial net earnings gains, reinforcing higher education as a worthwhile investment. We close with a discussion of implications for student loan and higher education policies.