Questioning the value of a college education is a popular pastime. Authors of trend stories and think pieces like to wring their hands at the rising costs of student debt, and the apparent lack of full-time employment for college graduates.
This type of coverage has dominated the national conversation about the value of a college education, and if you’re like me, personal anecdotes from friends and relatives back up the assessment that college is too expensive. Maybe its cost no longer justifies its benefit.
A new study from the Pew Research Center, however, cuts through all the chatter.
It turns out, going to college still pays. And despite the bloated price of a degree (which continues to rise faster than inflation: the tuition at private schools in 2013, for example, was up 13 percent beyond overall inflation over the past five years) and the outsized average student debt load that comes with it, a college education remains the best possible investment for future earnings, economic well-being and career attainment.
First, let’s look at the unemployment rate. Despite the collective distress over the lack of available jobs for educated workers, millennial college graduates (those age 25 to 32) face an unemployment rate of 3.8 percent, a rosy number compared to the 8.1 percent for millennials with a two-year degree or some college and the 12.1 percent for those with only a high school diploma.
In addition, college educated millennials are more likely to be employed full time (89 percent) when compared to their counterparts without a degree (82 percent). And, on average, they make significantly more money than employed adults holding only a high school diploma: $45,000 a year, compared to $28,000 annually.
Yes, the recession hit the millennial generation particularly hard; even with a college degree it’s significantly more difficult for those age 25 to 32 to land a full time job than it was for previous generations. But the recession has disproportionately affected millennials with only a high school diploma: “On a range of measures,” the study notes, “they not only fare worse than the college-educated, but they are doing worse than earlier generations at a similar point in their lives.”
That’s because while the value of a college education has continued to increase (between 1965 and last year, the median annual earnings of 25 to 32-year-olds with a college degree grew from $38,833 to $45,500 in 2012 dollars), the value of a high school diploma has decreased (falling from $31,384 in 1965 to $28,000 in 2013).
Bottom line: across the board, the economic outlook for college graduates is far far brighter than it is for those without a degree. Unfortunately, if you can afford college, you really can’t afford not to go.
The inflated price sticker on a college education, then, is a huge issue, raising the barrier of entry of getting to college in the first place for students who lack the financial resources to pay for it. According to a recent Harvard Institute of Politics survey of 18-to 24- year old college undergraduates, 70% of respondents said that financial circumstances played an important role in their decision whether or not to attend college at all.
That’s a serious problem, as are the outrageous student loans being strapped onto the backs of 18-year-olds, arguably too young to make decisions like taking out $100,000 plus in debt.
But, despite what you may have heard, a college degree has not become a valueless symbol (note that the Pew study found that a college education has actually increased the real dollar average income for millennials compared to members of previous generations).
College educated millennials understand this: About nine-in-ten of respondents with at least a bachelor’s degree agreed with the statement that their college education has already paid off (72%) or will pay off in the future (17%). Even among the two-thirds of college-educated millennials who took out a loan to pay for their education, 86 percent still believe that their degrees have been worth it or expect that they will be in the future.
College experiences, of course, aren’t created equal. Most respondents with a college degree had serious regrets about their schooling; almost half wished they had pursued additional work experience while still in school, 30 percent said they should have started the job hunt sooner, and almost as many regretted their chosen major. (A surprise to no one: this percentage was higher for the liberal arts kids than it was for science and engineering majors.)
A better understanding of the reality of the job market while at college, the study suggests, could have improved respondents’ employability. But not going to college at all would have created a far harsher one.