Is a College Education Worth the Cost? (Part 1)
Is a college education worth all of the expense? A study last year by the Pew Research Center found that a majority (57%) of Americans feel that higher education fails to provide students with good value for the money spent, and 75% say college is too expensive for most Americans to afford.
The conventional wisdom has been that college is one of the best investments you can make. For years, many parents have believed that getting their child into college would guarantee they’d get a good job, or at least a better job than they could get with just a high school diploma. But in a world economy that’s changing rapidly, the conventional wisdom may no longer apply.
In fact, much of the conventional wisdom has been based on statistics about how college graduates fare compared to high school graduates on average. However, what happens to any individual may be much better or worse than average.
How much does a college degree improve your chances of getting a job? Although having a college degree doesn’t guarantee a job, the unemployment rate for college graduates is much lower than for those with just a high school diploma. According to an analysis by the Economic Policy Institute, the unemployment rate for young college graduates (ages 21-24) over the past year (April 2011-March 2012) was 9.4%, whereas for young high school graduates, the unemployment rate was more than three times as high – 31.1%.
Those are averages for all recent graduates, though. Whether an individual college grad gets a job depends heavily on their major. A study by the Georgetown University Center on Education and the Workforce found that in 2009-2010, unemployment rates for recent college graduates varied from a high of 13.9% for students majoring in architecture and 11.1% for arts majors to a low of 5.4% for students majoring in health or education. Unemployment rates for engineers and business majors were around 7.5%.
Similarly, whether a high school graduate gets a job depends on how well they did in high school and what kind of job they pursue. There are thousands of highly-paid manufacturing jobs going unfilled today because businesses can’t find workers. Instead of a college degree, most of those jobs require someone with high-school level proficiency in reading and mathematics, a good work ethic, and on-the-job training.
Even though most recent college graduates are employed, many aren’t working in jobs that require a college education or are even related to their degree. A 2011 study by Rutgers University found that 40% of recent college graduates said their first job didn’t actually require a college degree. Less than half (44%) said their education was closely related to their first job, and nearly one third (30%) said there was little or no relationship between their education and their job.
Will you make more money if you get a college degree? U.S. Bureau of Labor Statistics data show that in 2011, the median annual pay in the U.S. for people with a bachelor’s degree (but not a more advanced degree) was $54,756. That’s 65% more than the median annual pay of $33,176 for people with only a high school diploma.
But just because the average college graduate makes significantly more than the average high school graduate doesn’t mean that going to college guarantees a higher salary for everyone. In 2011, 25% of workers with a bachelor’s degree earned less than $38,000 and 10% earned less than $27,000, whereas 25% of the people with a high school diploma but no college degree earned over $48,000 and 10% earned $66,000 or more. In other words, many people with just a high school diploma make more money than many who have a college degree.
Will the need for a college education increase in the future? You’ll often hear people say that “most new jobs in the future will require a college education.” That’s true, but it only applies to truly new jobs, i.e., jobs that have never existed before. 70% of job opportunities in the future will be existing jobs that become available due to retirements, relocations, and promotions, and experts project that most of those replacement jobs will not require a college education.
For example, thousands of manufacturing jobs will be opening up every year as current workers retire. But only 20% of production job openings in the future are expected to require an Associate Degree or higher. Just because they don’t require a college degree doesn’t mean the workers can be dumb; indeed, today’s manufacturing firms need people who can operate sophisticated computerized machinery and implement customized production processes, and that requires far more proficiency in mathematics than was required of the typical assembly line worker in the past. Training is typically provided by the companies themselves or by specialized certificate programs, not by four-year colleges. If we’re going to help industries such as manufacturing and energy grow in our region, we need to encourage smart, hard-working high school graduates to pursue the high-paying jobs they offer.
Does the benefit of college outweigh the cost? Although there are clearly advantages to a college degree, it’s very expensive to get one, and for many students, the results may not justify the financial sacrifices they have to make. High school guidance counselors should help parents and high school students understand that going to college isn’t the only path to a rewarding career and a good income, and make them aware of the many high-paying opportunities available in manufacturing and other industries that need a lot of smart workers, but not necessarily college graduates.
A future post will look at why college is so expensive and whether there are ways to increase the value of higher education relative to its cost.
(A version of this post appeared as the Regional Insights column in the Sunday, June 3, 2012 Pittsburgh Post-Gazette.)