2013 Reports

The Economic Benefits of Attaining an Associate Degree Before Transfer: Evidence From North Carolina

Belfield, Clive

Many students enroll in a two-year college with the intention of transferring to a four-year college and obtaining a bachelor’s degree. These students must decide whether to first complete their associate degree at the two-year college and then transfer, or to transfer earlier without earning a degree from the two-year college. An informed decision on this matter requires information about several factors, many of which are hard to observe. This paper presents a model for making the optimal transfer decision. I consider each possible outcome and use data on student credit accumulation, award receipt, and labor market returns from students in the North Carolina Community College System (NCCCS) to calculate which outcome is best, given its probability of occurring. The findings suggest that, on economic grounds, more NCCCS students should complete their associate degree before transferring to a four-year institution to attempt a bachelor’s degree. This conclusion is made from the perspective of the state of North Carolina, comparing all college costs (composed of public subsidies and tuition revenue) with the labor market benefits of college. Taking into account how many credits and which award (if any) a student earns, the total cost of providing public (two- and four-year) college education is approximately the same whether a student completes an associate degree first or whether that student bypasses that degree and transfers earlier to a four-year college. In absolute terms, the student will have received approximately the same amount of resources by taking either pathway. However, the benefits of first completing an associate degree exceed the benefits of early transfer, as relatively few students who transfer early ever complete a bachelor’s degree and therefore leave college with no credential. Thus, the net benefits of choosing to complete an associate degree before transfer are greater than the net benefits of early transfer. This conclusion is robust to many alternative scenarios as to the value of credits, the probability of completing each degree, and the labor market returns to college. For early transfer to be more valuable than earning an associate degree beforehand, the pool of early transfer students must have a bachelor’s degree completion rate that exceeds 90 percent.