The Texas Public Policy Foundation is pleased to release its first annual ranking of public higher education systems based on a debt-to-earnings test.

A state’s ranking is determined by the percentage of its college graduates who complete their degrees at programs that pass a debt-to-earnings test. This test measures post-college earnings versus student loan debt to help distinguish college programs that are sound economic investments for their students from those that leave their students too heavily burdened with student loans. Over 5,000 programs at public universities do not pass this debt-to-earnings test, indicating that around 500,000 graduates per year are using federal financial aid to attend financially risky programs. While there is, no doubt, much more to college quality than the economic return, the economic return shouldn’t be ignored by the students, parents, and taxpayers funding a state’s colleges.

These rankings reveal a wide range of performance of public higher education systems. In some states, most students graduate from programs that pass the debt-to-earnings test, indicating that their post-graduation income is high enough to enable them to repay their student loans. But in other states, many students are attending programs that fail the debt-to-earnings test, indicating that students’ post-graduate earnings are not high enough to allow them to realistically repay their student loans.

Key Points:

  • There is wide variation in the performance of public higher education systems, with the percentage of students attending a program that passes a debt-to-earnings test ranging from 45 to 89 percent.
  • Texas’ public higher education does well, coming in #8.
  • Coming in #8 means there is still room for improvement.