In an era of rising tuition costs and alternative education pathways, both students and education lenders face a critical question: Do college degrees still matter? The short answer is yes. While the value of a degree varies by field, institution, and borrower profile, higher education remains a key driver of long-term economic mobility and loan performance.
For lenders, understanding how degrees translate into borrower outcomes is essential for effective risk management, product design, and borrower engagement.
Degrees and economic outcomes
Decades of labor market data consistently show that individuals with a college degree earn more over their lifetimes than those without one. According to the United States Census Bureau, in 2024 the median income of households headed by someone with a bachelor’s degree or higher was $132,700–more than double the $58,410 median income of those with householders with a high school degree but no college.
Additionally, degree holders experience lower unemployment rates and greater job stability compared to those with only a high school diploma. This earnings premium directly affects borrowers’ ability to repay loans.
From a lender’s perspective, degree attainment is a strong indicator of future income potential. While it is not a guarantee of financial success, it significantly improves the probability of steady employment and positive repayment behavior.
Not all degrees are equal
That said, the value of a college degree is not uniform. Outcomes vary widely based on factors such as:
- Field of study: STEM, healthcare, and business degrees often lead to higher starting salaries and return on investment than those in humanities or arts disciplines.
- Institution type: Graduation rates, accreditation, and institutional reputation influence employment prospects.
- Level of education: Graduate and professional degrees typically yield higher earnings but also come with larger debt burdens.
For lenders, this variability highlights the importance of moving beyond a one-size-fits-all view of student borrowers. Incorporating academic program data, completion rates, and employment trends into underwriting can provide a more accurate assessment of repayment risk.
Completion matters more than enrollment
One of the most significant predictors of loan performance is whether a borrower completes their degree. Students who take on debt but leave school without completing a degree face the highest risk of delinquency and default. They carry the financial burden of student loans without the earnings advantage that typically comes with a degree.
This makes student retention and completion not just an educational issue, but a financial one. Lenders who partner with institutions or offer borrower support tools—such as financial literacy resources or flexible repayment options—can help improve completion rates and, in turn, portfolio outcomes.
Degrees in a changing education landscape
Alternative education tracks such as certificate programs and micro-credentials are gaining popularity, especially in tech-driven fields. When evaluating lending for these non-traditional programs, it is critical to consider the earnings and placement outcomes of these careers. For educational pathways such as pilots, nursing, and other high-demand, high-earning fields, providing funding can still be a wise decision.
Why degrees still matter
Despite debates about the costs of college, degrees continue to matter for several reasons:
- Predictability: Degrees provide a measurable indicator of future earning potential.
- Risk mitigation: Borrowers with completed degrees statistically perform better in repayment and will have additional financial needs throughout their adult lives, such as auto loans and mortgages.
- Market demand: Employers still rely heavily on degrees as a screening tool for candidates.
In other words, while education pathways are diversifying, traditional college degrees remain central to the student lending ecosystem.
Implications for student loan strategy
For private student lenders, the goal is not simply to finance education, but to support outcomes that lead to successful repayment and lifelong member relationships. This means:
- Using data to understand how different programs affect borrower risk.
- Designing products that align with long-term borrower success.
- Educating students about the financial return of different educational choices.
For more than 18 years, CU Student Choice has identified institutions and programs that support responsible student lending. As the education landscape evolves, we continue to expand into other career education paths and new graduate professional lending solutions—ensuring our products grow alongside the needs of today’s students and workforce.
Learn more and connect with us to explore strategies for launching or expanding education lending, connecting with new borrowers, and reinforcing your credit union’s value as a long-term financial partner.
