The Economic Returns of a Rural Education

Rural colleges and universities tend to be more affordable and accessible and have shorter times to degree than their urban and suburban counterparts, according to a recent report by researchers at Boston College.

And while rural colleges’ student completion rates and earnings outcomes slightly lag behind those of nonrural institutions, the gaps are minimal, researchers conclude.

The report is part of a new research series developed by the Institute for Higher Education Policy (IHEP) called “Elevating Equitable Value,” announced Wednesday by the research and advocacy organization. The series includes papers on a variety of subjects that draw on IHEP’s Equitable Value Explorer, a data tool to compare postcollege earnings across student populations and institutions.

The report draws on two data sets: institutional data for 2,525 colleges and universities from the Alliance for Research on Regional Colleges and the Equitable Value Explorer data set from IHEP, which uses U.S. Department of Education and Census Bureau data. The report also draws on a framework by the alliance for defining a rural-serving institution, or a “high” rural-serving institution, based on the percentage of rural residents in the county where a college is located and the share of degrees awarded in agriculture, parks and recreation, and natural resources fields, among other factors.

“There are lots of misconceptions about rural colleges … and who they serve,” said Angela Boatman, an author of the report and an associate professor of higher education at Boston College. Combining the data sets allowed for “a more nuanced picture” of these colleges and their economic returns for students a decade later.

The report found that the students served by these institutions tend to be less racially and ethnically diverse than students at urban and suburban colleges, likely because of racial demographics in rural areas. However, 53 percent of community colleges, a third of historically Black colleges and 18 percent of Hispanic-serving institutions qualify as rural serving, according to the report. With the exception of the student bodies at rural community colleges, students of color make up at least 35 percent of population at rural-serving institutions across sectors. Rural-serving institutions on a whole also serve higher shares of students who receive the Pell Grant, federal financial aid for low-income students.

Too often people believe “rural is code for white,” said Dreama Gentry, the CEO of Partners for Rural Impact, a nonprofit organization focused on improving academic and career outcomes for rural students. “Rural America is diverse, becoming more diverse … Rural students include students of color across the country.”

Rural-serving institutions tend to be less selective, the report notes. The average admission rate for rural-serving institutions is almost 76 percent, compared to 72 percent for nonrural institutions. Students also generally take a little less time to graduate from rural-serving institutions. For example, the average time to earn academic credentials at nonrural public two-year colleges is about two and a half years, compared to 2.36 years at rural-serving institutions and 2.27 years at high rural-serving institutions. The difference was less pronounced among four-year colleges, with students at public nonrural institutions completing their studies in four and a half years on average compared to 4.42 years at public rural and high rural-serving institutions. Rural colleges also charge lower tuition on average compared to nonrural colleges across institution types, except for at private two-year colleges.

“This is evidence that rural-serving institutions are accessible, they’re affordable, they in some ways offer a better time to degree for those who attend them,” Boatman said, adding that the institutions have a positive “economic impact on the students that they’re serving.”

Shadman Islem, an author of the report and a doctoral student in higher education at BC, said while the data doesn’t indicate why rural-serving institutions have quicker times to graduation, other research on rural students shows they’re job-focused and have a “what-would-a-degree-do-for-me attitude,” so they might be more likely to come to college with a plan to complete quickly.

Leslie Daugherty, head of design programs at the Education Design Lab, an organization focused on innovative education models, including at rural institutions, said rural colleges also tend to have strong relationships with local employers, so they may be graduating students quickly to be “proactive” about anticipating and meeting workforce needs.

Earnings Outcomes

Not all the data points in the report are so rosy and clear cut.

Rural-serving institutions have lower average completion rates than other institutions, except at public two-year colleges, the report showed.

Students who attend rural-serving institutions also have slightly lower median earnings a decade after they enroll compared to their peers, according to the report. But the difference in earnings is negligible, the report authors argue. A student who graduates from a high rural-serving institution is expected to earn $49,441 annually, 2.3 percent or $1,150 lower than the expected income for a student at a nonrural institution. The earnings gap is slightly more pronounced at the two-year college level, a $1,256 or 3 percent difference between high rural-serving and nonrural institutions.

Gentry noted that wages in rural areas tend to be lower, so if students are staying and working in rural areas after they graduate from rural colleges, that might explain the modest difference in their earnings outcomes.

The report also found that students at rural-serving institutions were highly likely to earn enough to recoup the cost of their degrees, but they weren’t necessarily as likely to achieve an earnings premium, reaching or surpassing median earnings in their fields of study, or achieve economic mobility, earning in the 60th percentile regardless of field.

The likelihood of an earnings premium after attending rural-serving institutions is slightly below 50 percent, though the likelihood at nonrural colleges wasn’t much higher—53 percent for nonrural two-year institutions and 54 percent for nonrural four-year institutions. The report found a “statistically insignificant” relationship between the likelihood of achieving economic mobility and attending a rural-serving college or university.

“One of the takeaways that we find is that while we’re not seeing major earnings, mobility outcomes, you’re not seeing it for nonrural institutions at high rates really, either,” Boatman said. “So, there’s not a big distinction geographically. It poses much bigger questions, then, about the returns to college more broadly.”

Islem said he hopes the key takeaway from the results about lower completion rates and earnings outcomes is that these differences between rural-serving and nonrural institutions aren’t especially large or “insurmountable.” He added that closing these gaps is a “smart area of investment” for state policymakers, given that the institutions are “broadly accessible,” “cheaper” and their students who complete “graduate on time or faster.”

Daugherty, said the report highlighted “how important these rural-serving institutions are to these communities.”

“People are looking to be able to earn a living wage, get into a family-sustaining wage, and these institutions a lot of times are the only place geographically where they can access that,” she said. “As we think … about economic mobility and agility in the U.S., we just have to make sure we’re not leaving those rural-serving institutions out of that conversation.”