Andrew Yang: University Returns Entering a Divergence Era
Andrew Yang believes that AI is diminishing the career returns of expensive general universities. Families should reassess tuition, debt, school quality, and employment paths, rather than defaulting to the notion that "prestigious schools equal investment returns."
His judgment is not that "college is useless," but that the university market is polarizing: top schools still have brand value, alumni networks, and recruitment access, while low-cost public universities, community college transfer paths, and vocational education remain cost-effective. The most vulnerable are mid-tier schools that charge high fees, have low selectivity, and weak employment pathways.
Employment mismatch has weakened returns for some graduates. Research shows that up to 52% of U.S. college graduates are in jobs that typically do not require a degree when they first enter the labor market; even 10 years later, about 45% are still in this underemployment state.
However, the degree premium has not disappeared. Typical bachelor's degree holders earn about 86% more annually than those with only a high school diploma, and their unemployment rate is about half that of the latter; the key differences lie in the field of study, school, debt, region, and whether the first job after graduation matches the degree.
Higher education institutions themselves are also facing demographic and financial pressures. An extreme scenario studied by the Philadelphia Federal Reserve indicates that if enrollment drops by 15% from the 2019 baseline, as many as 80 institutions could close between 2025 and 2029; a gradual 15% decline could lead to about 23 closures.
In market mechanisms, AI and corporate recruitment contractions are suppressing demand for entry-level knowledge jobs. Employers will concentrate limited campus recruitment resources on a few schools and nearby areas; students will reprice based on tuition, debt, school sustainability risks, regional networks, and career exits. Beneficiaries are low-cost high-quality programs, top schools, technical vocational education, and institutions with strong recruitment networks; those under pressure are schools that rely on high tuition, low selectivity, and weak employment conversion.
Source: Public Information
ABAB AI Insight
The capital path of U.S. universities over the past few decades has been built on a stable chain of "degree - white-collar job - income growth - repaying student loans." As non-degree jobs absorb more graduates, this chain has broken: a recent graduate with a degree matching their field can earn about 88% more than a high school graduate who did not attend college, but college graduates in underemployment only earn about 25% more; the return on education depends on whether one enters a job that matches their degree.
Yang's assertion that "the top and low-cost ends are more valuable" essentially reflects the barbell distribution of educational assets. Top schools can sell screening signals, peer networks, employer channels, and identity capital; low-cost public universities, community colleges, and apprenticeships improve return rates by lowering upfront capital investment. Mid-tier private institutions without differentiated programs, regional employer relationships, or sufficient endowment funds will lose pricing power amid rising tuition and declining enrollment.
Historically, a university degree was a passport from the industrial economy to the office economy; today, AI primarily impacts entry-level tasks in documentation, analysis, coding, research, and administration. The issue is not whether AI will completely replace college graduates, but whether employers can accomplish past tasks that required many entry-level analysts, coordinators, and assistants with fewer new hires, thereby reducing overall campus recruitment and raising selection thresholds.
This is a form of technological substitution, but it is not "education" itself that is being replaced; rather, it is the function of a university diploma as an automatic entry ticket to entry-level white-collar positions. The most valuable education in the future will emphasize skills that are difficult to automate: trustworthy execution, face-to-face collaboration, industry practice, customer relations, hands-on skills, and continuous learning; if schools cannot translate these skills into employment, networking, or personal growth, they will be squeezed out by lower-cost alternative paths.
ABAB News · Cognitive Laws
A diploma is not an asset; the ability to monetize is the asset.
The more tuition resembles an investment, the less returns can rely solely on faith.
AI is lowering entry-level positions; education must provide stronger entry points.