Ask Dr. Salary: 4-Year vs. 2-Year College Degrees: How does the Pay Compare?

With the rising cost of four year colleges, people may ask themselves whether the salary promised by a bachelor's degree is really worth the time and money required to complete the program. Why not complete an associate's degree program, and enter the workforce sooner and (mostly) free of debt?

Using the extensive PayScale salary database, in this post we will examine the pay differences across degrees and other characteristics. While our database has its limitations - for example, we don't track unemployment rates, which are much higher for less advanced degrees - it gives us insight into the value in salary of finishing 4 years at a college or university.

Will a bachelor's degree lead to higher pay in your career? Use the PayScale Salary Survey to find out.

Salary by Degree for Starting Workers

We first look at pay for starting workers, which are workers with less than 5 years of experience. The typical starting worker in the included data set has 2 years of experience. Regardless of whether we are looking at the bottom earners (10^th percentile), the top earners (90^th percentile), or the typical earners (50^th Percentile/Median), the bachelor's degree worker earns at least 20% more than the associate's degree worker in our sample:

Pay Percentile	Associate's Degree Starting Pay	Bachelor's Degree Starting Pay
10^th	$21,000	$25,400
25^th	$26,700	$32,900
50^th	$35,100	$43,200
75^th	$46,700	$56,900
90^th	$61,600	$73,800

Pay by Degree for Experienced Workers

Next we looked at the pay for experienced workers, which we defined as employees with at least 10 years of experience. The typical experienced worker in the included data set has 15 years of experience. Similar to starting workers, experienced bachelor's degree workers make more than experienced associate's degree workers at every level. In fact, the increase in bachelor's pay over associate's pay (Bachelor's Premium) increases with each pay percentile.

Pay Percentile	Associate's Degree Experienced Pay	Bachelor's Degree Experienced Pay	Bachelor's Premium
10^th	$29,600	$39,600	34%
25^th	$39,100	$54,100	38%
50^th	$52,100	$75,000	44%
75^th	$69,200	$106,000	53%
90^th	$90,100	$151,000	68%

It is possible for an employee with an associate's degree to earn the same or more than one with a bachelor's degree, but it is not the most common case. One would hedge one's bets of higher earnings by getting a bachelor's degree or more. For example, when looking at experienced workers, you need to be in the top 20% of earners with associate's degrees to earn the same or more than the typical bachelor's degree worker.

Pay by Degree for a set of Jobs

Looking at national pay by degree shows that a bachelor's degree is generally a win in terms of earnings, regardless of the experience and pay percentile of the worker.

What if we look at pay for specific jobs where a worker can hold either a bachelor's or associate's degree? Does a bachelor's degree always offer a large increase in pay over an associate's degree? The answer is no. For certain jobs, you obtain the necessary knowledge in an associate's degree program and thus gain little job-specific knowledge by instead taking a bachelor's degree program (e.g. Nurse, Dental Hygienist, Chef, etc.)

The following table lists jobs where holding a bachelor's degree increases a worker's median pay by no more than 10% above associate's degree workers:

Jobs	Bachelor's Premium (Starting Pay)	Bachelor's Premium (Experienced Pay)
Administrative Assistant	10%	4%
Dental Hygienist	9%	5%
Funeral Director	9%	2%
Interior Designer	2%	10%
Registered Nurse	4%	6%
Systems Administrator	7%	9%
Executive Chef	10%	6%

In other jobs, it does truly pay to hold a bachelor's degree, although one is not required in the job. In these jobs, which are mostly managerial and professional jobs, bachelor's degree workers earn a median pay 15% or more above associate's degree workers.

Jobs	Bachelor's Premium (Starting Pay)	Bachelor's Premium (Experienced Pay)
Construction Project Manager	17%	19%
Data Analyst	22%	25%
Financial Controller	28%	38%
Graphic Artist / Designer	15%	20%
Information Technology Manager	28%	26%
Inside Sales Representative	15%	24%
Outside Sales Manager	33%	19%
Systems Engineer, IT	22%	21%

Do the Extra 2 Years Pay-off?

In general, getting a bachelor's degree is a win in terms of pay over an associate's degree. In our sample, the national starting median pay for those who hold only a bachelor's degree is $43,200, which is over 20% higher than the national starting median pay for those who hold an associate's degree ($35,100).

However, those extra two years are expensive. Assuming you don't work at the median associate's degree pay of $35,100 for two years, and pay ~$8,000 a year for tuition and fees, that is a $88,200 in foregone income and expenses.

With the $8,100 (starting) to $22,900 (experienced) median per year premium for a bachelor's, it will take less than 10 years to earn back the missing earning years and tuition cost. Everything after that is gravy.

Of course, most people would also count two years of college as a lot more fun than 2 years of full-time work :-)

Getting a bachelor's degree doesn't just come with a higher chance of good pay. It also improves your chance of staying employed. According to the Bureau of Labor Statistics, the unemployment rates of workers who were 25 years and older in September 2009 were as follows:

High School Degree/GED and no college: 10.8%
Some College/Associate's Degree: 8.5%
Bachelor's Degree and Higher: 4.9%

In conclusion, when looking at typical pay the employee with a bachelor's degree will always earn more than one with an associate's degree. Although top earning associate degree workers can earn the same or more as the typical bachelor degree holder, the key word here is "can." The above data shows that it is not the common case.

For people trying to find a way to earn high pay, a bachelor's degree will likely help them.

Are you curious about the pay you could receive with your bachelor's degree? When you want powerful salary data and comparisons customized for your exact position or job offer, be sure to build a complete profile by taking PayScale's full salary survey.

Regards,

Katie Bardaro
Research Analyst, PayScale, Inc.