Georgetown study says college degree still worth the front-end costs
Despite the soaring costs of college (rising at 3 percent above inflation for over a decade), a new report from the Georgetown University Center on Education and the Workplace argues the lifetime financial benefits are still worth the five-digit amounts of debt graduates endure.
In its findings, the study notes the value of a full college degree has risen since 1999, with lifetime income increasing from 75 percent to now 84 percent more than what a high school graduate would make. That uptick translates into $2.3 million to the high school graduate’s $1.3 million in expected lifetime income.
The more expensive degree doesn’t necessarily translate into a higher salary. In the press release announcing (PDF) the study, Anthony P. Carnevale, the Center’s director and co-author of the report, said, “major and occupation matter just as much as degree level. For example, 28 percent of people with an Associate’s degree make at least as much as the average Bachelor’s degree holder—mostly due to occupational choice.”
In a previous report (PDF), the Center estimated nearly two-thirds of all U.S. jobs will require some amount of college education. Currently, four-in-ten adults possess a college degree.
Here’s a breakdown of expected average earnings by education from the Carnevale study:
• A high school dropout can expect to earn $973,000 over a lifetime.
• Someone with a high school diploma can expect to earn $1.3 million over a lifetime.
• A worker with some college but no degree earns $1.5 million over a lifetime.
• An Associate’s degree-holder earns $1.7 million over a lifetime.
• A worker with a Bachelor’s degree will earn $2.3 million over a lifetime.
• A Master’s degree-holder earns $2.7 million over a lifetime.
• A Doctoral degree-holder earns $3.3 million over a lifetime.
• A Professional degree-holder earns $3.6 million over a lifetime.
Naturally, where you work matters, and in many instances a worker can out-earn a more educated counterpart.
From the report:
• 31% of high school dropouts earn more than the median earnings of workers with high school diplomas.
• 37% of those with a high school diploma make more than the median earnings of workers with some college/no degree.
• 42% of people with some college/no degree earn more than the median earnings of workers with an associate’s degree.
• 28% of people with an Associate’s degree make more than the median of workers with a Bachelor’s degree.
• 40% of people with a Bachelor’s degree earn more than the median of workers with a Master’s degree.
• 36% of people with a Master’s degree make more than the median of workers with a Doctoral degree.
• 37% of people with a Doctoral degree make more than the median of workers with a Professional degree.
The authors provide this takeaway:
Today, careers follow occupational paths. These occupations— engineering or accounting for example— can be found in any number of industries (you can be an accountant for a bakery or for an airplane manufacturer). As a result, today’s workers are more attached to the occupations they fill than to the industries in which they work.
At the least, in economic downturns, owning a college degree is an indicator of even having a job. In the July labor report issued by the Bureau of Labor Statistics, workers over the age of 25 with a college degree had an unemployment rate of 4.3 percent, while graduates with just a high school degree contended with a jobless rate of 9.3 percent.
But despite federally-backed loan programs, many Americans are priced out of a college education.
From College Board:
- Public four-year colleges charge, on average, $7,605 per year in tuition and fees for in-state students. The average surcharge for full-time out-of-state students at these institutions is $11,990.
- Private nonprofit four-year colleges charge, on average, $27,293 per year in tuition and fees.
- Public two-year colleges charge, on average, $2,713 per year in tuition and fees.
But value doesn’t mean a good education nor does it portend an ability to pay off debts, as TAI wrote in this post last week.
In terms of debt accumulated versus number of degrees issued, a report from Education Sector figuredthe ratio at public four-year universities was $16,247 and $21,827 for private non-profit schools, while students of for-profit universities were saddled with $43,383 in debt for every degree.
In 2008, the high school graduation rate was 70 percent; the six-year college graduation rate nationwide was 55 percent in 2009. Depending on who you believe, the graduation rate among community college students is between 20 and 25 percent, while the completion rate among for-profit college students ranges between 19 to 49 percent.