Earlier this month, higher education institutions across the state held fall commencement ceremonies for thousands of students. Topping the charts were the University of Tennessee, Knoxville, and the University of Memphis, both awarding over 2,000 degrees, and Middle Tennessee State University, which awarded over 1,600 degrees.¶
This is undoubtedly worth celebrating. The degree is not just a piece of paper—it represents years of hard work, late nights, and dedication towards a program of study. ¶
Graduation was perhaps an even greater milestone for the thousands of first-generation students and adult learners, many believing the degree was a ticket to greater economic opportunity and prosperity. ¶
This is still true—mostly. Nationally, earnings trend upward in correlation with greater educational attainment, while unemployment rates simultaneously trend down. Put simply, the more educated a person is, the more likely they are to have a job and make more doing it. ¶
While this should be an encouraging data point for our newly minted graduates, it does not tell the whole story. A 2024 study found 52 percent of college graduates were underemployed in their first year, meaning they held jobs that did not require a degree. Over time, this number improved only slightly, with 45 percent of graduates underemployed a decade after graduation. Tennessee has fared slightly better than average, with 47 percent of bachelor’s degree holders underemployed five years post-graduation.¶
Some have used this statistic to suggest a college degree is simply no longer valuable, which is in part reactionary to perceptions that college was “pushed” on too many students over the past few decades, with some arguing further that this has led to shortages in many skilled trades.¶
Others insist the greater lifetime earning potential of degree holders and growing industry demands for degree-only jobs overwhelmingly support positioning college as the primary aspiration for high school students, with many further arguing that more students should pursue advanced or graduate degrees. ¶
Neither side is entirely correct, because both are asking the wrong question. Instead of asking whether higher education is valuable, the better question is, “What kind of higher education has the greatest return on investment, and how do we support those programs?”¶
More bluntly—find what works and do more of it. ¶
Reframing the question also reconciles the two apparently conflicting data points. While it is true that college graduates are more likely to earn more than those without a degree, it is also true that many students are not choosing degree programs that translate to higher earnings. ¶
This suggests that the overall higher earnings of college graduates are bolstered by high- and medium-high-earning fields, such as engineering, computer science, finance, and health sciences, while many other degree holders earn far less, often in fields that did not require a degree in the first place. ¶
However, earnings and career outlook are not solely dependent on degree programs themselves. For many programs, access to career coaching, paid internships, or other experiential learning opportunities can substantially improve students’ odds of landing a degree-relevant career and potentially earning more. ¶
The solution to the underemployment issue is twofold. First, higher education institutions should be better incentivized to award degrees in high-demand, high-wage fields. Graduation rates and degree conferral alone, regardless of whether it took four or six years, are of little importance if graduates are not moving into successful careers. ¶
Though STEM and quantitative-skills programs generally top the list for industry demand and earnings, other programs can produce positive outcomes for graduates when the right supports are in place. This involves not only an investment in career coaching and internship coordination from schools, but also the partnership of the business community. ¶
Tennessee has an opportunity to improve this incentive structure as it undergoes the revision process for its Outcomes-Based Funding Formula (OBF) in 2026. Currently, the program incentivizes numerous outcomes in public higher education institutions, including credit hour attainment, degree attainment, six-year graduation rates, and research programming. ¶
If additional weighting were constructed for high-demand and high-wage fields and internship and experiential learning completion, institutions would have better support and guidance on where to invest resources that will lead to greater student success. ¶
Steven Bergman serves as Assistant Director of Government Relations for Tennesseans for Student Success. The Tennessee Firefly is a project of and supported by Tennesseans for Student Success.¶
