Is college worth it for everyone? The college premium is increasing, but only for those who earn a degree. And not every degree is a ticket on the gravy train.
The “college premium” has been exaggerated by high-profile studies, write Andrew G. Biggs and Abigail Haddad in The Atlantic. So has the payoff for majoring in a STEM field.
Smarter people are more likely to earn a college degree and to major in engineering, science and math, they write.
Only 58 percent of new college students who began in 2004 had graduated six years later, according to federal data. “Dropout rates are even higher at less selective colleges, whose students are presumably most on the margin between attending college following high school and entering the workforce.”
Calculating returns to education only for those who attend college and graduate is like measuring stock returns for Google while ignoring those for General Motors.
High school students who go on to college are quite different from those go directly to the workforce, they write.
(The collegebound) took a more rigorous high school curriculum, scored better on tests of reading and math, came from higher-income families, were in better physical and mental health, and were less likely to have been arrested. These are all correlated with higher earnings regardless of whether a person attends college . . .
Controlling for “both the risk of not graduating from college and differing personal characteristics” cuts the “earnings boost attributable to college attendance” in half, write Biggs and Haddad.
Graduates in technical fields earn significantly more than graduates in “softer” majors, studies have shown. “High school graduates aiming for high-earning majors such as engineering enter college with higher average SAT scores, according to the National Center for Education Statistics, while those aiming for lower-paying majors have lower average SAT scores,” write Biggs and Haddad. “High-paying jobs also entail longer work hours.”
What school will make you poorest? asks Jordan Weissmann on Slate. Every year, Payscale surveys college graduates to assess their earnings relative to their college costs. At almost two-dozen colleges, the average graduate’s “earning power won’t increase enough to justify the cost of tuition,” writes Weissmann. “To be blunt, these schools make students poorer.”
“Payscale doesn’t compare the alums of low-ranked colleges to demographically similar high school grads,” notes Weissmann. So colleges that enroll less-capable students will do worse at raising their earnings.
The Atlantic looks at colleges and majors that are the “biggest waste of money.” For example, “the self-reported earnings of art majors from Murray State are so low that after two decades, a typical high school grad will have out-earned them by nearly $200,000.”
Here are the degrees with the lowest 20-year net return, according to Payscale. Bold names are for in-state students. There are a lot of education degrees on the list.
Unless you’re attending a rigorous, high-prestige university, an arts degree is a risky bet, points out The Economist. “Of the 153 arts degrees in the study, 46 generated a return on investment worse than plonking the money in 20-year treasury bills. Of those, 18 offered returns worse than zero.”
The Payscale study overstates the financial value of a college education, warns The Economist. It compares graduates’ “earnings to those of people who did not go to college—many of whom did not go because they were not clever enough to get in. Thus, some of the premium that graduates earn simply reflects the fact that they are, on average, more intelligent than non-graduates.”
Stanford is the number one dream college for students and parents with Harvard in second, according to the Princeton Review’s annual conducts our annual College Hopes and Worries survey. Respondents are readers “Best Colleges” guidebook readers and users of the Princeton Review website.
The number one worry is college costs.
Half of students and parents say the biggest benefit of earning a college diploma will be a better job and higher income, while the rest are split between “education” and “exposure to new ideas.”
The cost of not going to college is rising, according to a Pew Research Center analysis. Four-year college graduates ages 25 to 32 who are working full time earn about $45,500, while high school-only young adults average $28,000. The $17,500 gap is a record. College graduates aren’t earning much more than they did in 1986, but wages are sliding for workers with only a high school diploma.
Seven out of 10 high school graduates choose college, observes Smart Shoppers, a report by College Summit and Bellwether Education Partners. Despite warnings of a degree glut, the college wage premium continues to rise. College-educated workers earned 80 percent more than high school-only workers in 2012.
Schools must do a better job identifying students — especially disadvantaged students — who aren’t reaching their potential, Smart Shoppers argue. “Schools, colleges, nonprofits, and businesses need to do a better job of educating students about their options on which college they should attend, which degrees they should pursue, and how they should pay for it.”
About a quarter of the gap in college attendance between affluent and working-class students can’t be explained by academic performance, a new study concludes. The Sutton Trust, a British think tank, looked at college-going in the U.S., Britain and Australia.
At 25, Katie Brotherton is working two jobs, but living in a parent’s basement, dependent on Mom (or Dad) for food, gas and health insurance. She owes $188,307.22 for two college degrees at private universities, she writes on Cincinnati.com. (She doesn’t specify her major or her occupation.) Sadly, Brotherton didn’t learn to write or think clearly — and she certainly didn’t learn to do the math.
My pursuit in excellent education is rooted in a value system that promotes progressive thought for the betterment of the individual as well as society. Education is a core tenet and vested interest of the functioning democratic society. Upon that basic assumption and principle, I am overwhelmingly incensed by the silent epidemic of crippling student debt.
. . . this particularly sensitive conversation is being ignored by our mainstream consciousness. Perhaps I should be ashamed for buying such an unaffordable education and internalize my debts as personal failures. Perhaps my mistakes warrant pained silence. But silence breeds apathy, and in regard to the welfare of the American economy, I want to humanize the numbers and give voice to this reprehensible problem.
Due to reckless neglect, student debt will be the financial ruin of my generation, and there is an incredible need for a public discourse addressing this reality and its grave consequences.
I want answers and clarity as to why this happened. How did I arrive at this position in life so financially handicapped and disenfranchised? I followed societal expectations, earned an education and am employed. I will gladly repay my debts within the comfortable reason of affordability.
. . . I am owed answers simply because I have the right to pursue happiness. And since I am not alone in this debilitating epidemic, my peers deserve their voice as well.
Overborrowing and underthinking will get a gal in trouble, writes Bryan Preston on PJ Tatler.
Millennials are “the screwed generation,” some argue. They were told to “invest in yourself” and take on “good debt” to win a guaranteed college premium, writes Megan McCardle on The Daily Beast. As tuition goes up and up, the college premium is eroding for humanities and social sciences majors. For marginal students, college is a bad bet.
The price of a McDonald’s hamburger has risen from 85 cents in 1995 to about a dollar today. The average price of all goods and services has risen about 50 percent. But the price of a college education has nearly doubled in that time. Is the education that today’s students are getting twice as good? Are new workers twice as smart? Have they become somehow massively more expensive to educate?
College costs rose faster than inflation by 1 percent a year till the mid-1980s, says Ohio University economist Richard Vedder.
“Now I see them rising 3 to 4 percent a year over inflation. What has happened? The federal government has started dropping money out of airplanes.” Aid has increased, subsidized loans have become available, and “the universities have gotten the money.”
“Even with these high prices, you’re still finding a high return for individuals who are bright and motivated,” says Nobel Prize-winning economist James Heckman. On the other hand, “if you’re not college ready, then the answer is no, it’s not worth it.”
And don’t go to a non-elite private college unless the financial-aid deal brings the cost down to the state university level.
Correction: As a commenter notes, Brotherton earned one of her degrees at Miami of Ohio, which is a public university.
College is a good investment for good students, but not for everyone, an economist advises. About one third of high school graduates have the academic skills, intelligence and motivation to succeed at a four-year college. The rest are more likely to succeed in job training at a community college or career college.
‘More college’ won’t solve unemployment, editorializes the New York Times. While people with bachelor’s degree are more likely to be working, recent graduates aren’t doing very well.
The college premium — the average difference in lifetime earnings of college graduates compared to high-school graduates — is a lot less than previous estimates, reports the Wall Street Journal. Often quoted at $1 million or $800,000 it’s more like $279,893, estimates Mark Schneider, a vice president of the American Institutes for Research, a nonprofit research organization. Even graduates of elite institutions don’t earn a $1 million premium, Schneider says.
(Estimates) don’t take into account deductions from income taxes or breaks in employment. Nor do they factor in debt, particularly student debt loads, which have ballooned for both public and private colleges in recent years.
The premium number is meaningless unless it’s broken down by field of study and student characteristics, responds Andrew J. Coulson at Cato @ Liberty.
What’s the premium difference, for instance, between workers who majored in engineering, chemistry, computer science, mathematics, economics, etc., compared to those who majored in communications, art history, social work, multicultural studies, etc.? A similar breakdown of interest would be by SAT score.
College costs have been growing faster than inflation year after year; salaries aren’t growing that fast in most careers. At some point, the premium for C+ students and “fuzzy studies” majors will reach zero.