Associate Degree or Bachelor’s Degree: Which Pays More? A Revealing New Study

The difference between earning a bachelor’s degree versus an associate degree can make a fundamental difference in someone’s life. A recent study published by The National Endowment for Financial Education (NEFE) in partnership with The Ohio State University (OSU), discovered key inequalities between two- and four-year degree holders that highlight just how divergent these two pathways can become, especially when it comes to student debt. So, associate degree or bachelor degree: which pays more in the long run?

The study, which was led by Rachel E. Dwyer, Ph.D., at OSU, examines the types of debt held by Americans between the ages of 20 and 30. It found that individuals who only complete a two-year degree are more financially vulnerable than individuals with a four-year degree. In some cases, those who earn an associate degree end up worse off than those who have no degree. The research shows that individuals who obtain associate degrees experience the greatest financial burdens when compared to both to bachelor’s degree holders and individuals who never enrolled in college.

When compared to other degree holders, those with associate degrees:

  • Have more exposure to vehicle and credit card debt and a higher rate of loan delinquency
  • Are more likely to pay higher interest rates on student loans
  • Were hardest hit during the Great Recession
  • Are more likely to have experienced other major life events, such as marriage and childbearing, during the same period that they are pursing education credentials

“What we are learning is that two-year college attendees experience major life events and transitions in a significantly different manner than most four-year degree holders,” Amy Marty Conrad, director of NEFE’s college-focused education program CashCourse, said in the spring 2019 issue of NEFE Digest. “Getting married, going to school, and having children at the same time have profound, long-term effects on debt holding and financial precarity. There’s an opportunity to address these situations in the financial education we offer to community college students.”

“Most data and assumptions about college debt focus on bachelor’s degrees, but these are not universally translatable to two-year degree holders,” Katherine M. Sauer, Ph.D. vice president of research and programs for NEFE, added. “Understanding the unique challenges of two-year degree holders forces us in the research and education field to treat them as a distinct group rather than lumping them in with traditional four-year students.”

The study also compared debt profiles of each type of degree holder at three stages in their lives, revealing that from age 20 to 30, debt portfolios between degree pathways begin to diverge:

  • Associate’s degree holders are more likely to have debt at age 20 than bachelor’s degree holders.
  • By age 25, about one in five has a mortgage and at age 30, a greater proportion of bachelor’s degree holders have house debt.
  • Vehicle and consumer debt are more common at every age for associate’s degree holders.
  • Both types of individuals are likely to hold credit card debt at age 25. The proportion of bachelor’s degree holders with credit card debt drops steadily over time, while associate’s degree holders see only a slight decrease.

To review the full study, click here.