Beyond ROI: What the New Fed Data Misses About Higher Ed’s Value Crisis

by The EAB Briefing Team

New research from the Federal Reserve Bank of New York offers a promising statistic: the average return on investment (ROI) for a college degree stands at 12.5%, a strong signal of its long-term value. But despite returns like these, public confidence in higher education is declining—and has been for the last decade.

Part of the disconnect may be explained by a deeper look into the Fed’s data itself: ROI varies widely for different students. For those who take longer to graduate, pay more out of pocket, or enter lower-wage fields, the return drops sharply, sometimes to the low single digits. According to the Fed’s model, roughly one in four graduates may not see a meaningful financial return at all.

But this variation still focuses just on those students who graduate with a four-year degree—a group that leaves out most Americans.

Zooming out to the national picture

EAB’s most recent State of the Sector research zooms out to look at the full national picture. We find some back-of-the-envelope calculations to be helpful in putting things in perspective:

About 87% of Americans graduate high school. Around 45% of those enroll in a four-year college upon graduating, and roughly 62% of them complete a bachelor’s degree within six years. That gets us to about 24 college completers for every 100 Americans.

Of those 24, fewer than half secure a college-level job within a year of graduation—bringing our estimate to just about 12 out of 100 Americans reaching what most would recognize as a strong, degree-connected job outcome from their higher ed experience.

Revealing a deeper disconnect

This underscores a broader reality: the traditional college pathway—built around four-year residential programs, full-time enrollment, and degree completion—only delivers value to a small share of the American population. Yet it remains central to how higher education, as a sector, defines and communicates its ROI and overall value. Programs that serve adult learners, working professionals, or career changers have often been treated as secondary to the “core” mission—and value—of the institution.

If only a small share of Americans reach the traditional payoff, it’s perhaps not surprising that confidence is waning among those who don’t see themselves in the system or in its results. Especially in 2025—amid shrinking high school cohorts, growing pressure on federal funding, and heightened political debate over higher ed’s role—institutions need to re-center both their mission and their messaging around the needs of the many, not just the few.

That means:

• Expanding offerings and pathways that extend beyond the four-year residential model.
• Investing in market-responsive, low-cost, flexible offerings that are practitioner-focused, competency-based, and outcomes-centric.
• Better tracking and communicating career and earnings outcomes so students can navigate choices with greater confidence and clarity.

What Comes Next

The Fed’s report offers a helpful reminder: higher education still delivers long-term value for many students. But there’s also an opportunity—and frankly imperative—to expand that value and rethink how institutions design and deliver educational offerings to meet the needs of many more Americans.

If the public no longer sees themselves in the system or in the outcomes it consistently delivers, then the issue isn’t just one of value. It’s one of relevance.

For a deeper look at these trends—including how traditional defenses of higher ed are trapped in an echo chamber, both sides of the political aisle agree on a growing list of critiques, and how every external constituency is behaving more like an investor—and how institutions can respond, explore our State of the Sector executive brief.