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2016 PayScale College ROI Report Shows How Household Income Affects Earnings After Graduation

Topics: Data & Research

The poor often stay poor – even if they’re college graduates. This year, for the first time, PayScale’s annual College ROI Report looks at how household income prior to attending college relates to income after graduation. In short, students who enter college from lower-income households don’t see the same return on their tuition investment as students who start off with more money in their pockets.

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In addition to listing ROI by school, state, school type, major, and job, this year’s College ROI Report looks at ROI by household income prior to entering college. Students who started college with less money also earn less after graduation. Only 18 percent of students who come from low-income families rise to the top 25 percent of earners by mid-career, compared to 39 percent of students whose pre-college household incomes were in the top 25 percent.

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Students who started college in the bottom 25 percent of income distribution earned median annual pay of $55,300 after graduation. Earnings increased to $62,900 for students who started their college careers with household incomes in the middle 50 percent, and to $69,300 for those who began in the top 25 percent. PayScale found the same pattern across every job type, experience level, and school type.

High household income continues to affect earnings throughout graduates’ careers. A third of workers who were in the bottom 25 percent during college report still being there, 10-plus years after graduation.

Poorer students see less wage growth over time than their richer fellow alumni. Those who report being in the bottom 25 percent of income distribution as students see early to mid-career median salary growth of 66 percent. Middle-income students are in a similar boat: those in the middle 50 percent have 68 percent growth. Graduates in the top 25 percent, however, see their salaries increase 91 percent from early to mid-career.

Finally, household income during college might predict, to a certain extent, how far up the corporate ladder a student will climb. Those in the top 25 percent of income distribution during college are more likely to become executives (18 percent) than any other job level, while those in the bottom 25 percent are more likely to become individual contributors or managers (33 percent each).

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Have you seen firsthand how household income affects outcomes after graduation? We want to hear from you! Leave a comment or join the discussion on Twitter.

Jen Hubley Luckwaldt
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