Is College Worth It? News Article

Is College Worth It? - Page 6 | Pew Social & Demographic Trends

This is a small segment of a very long, well researched article:

Is College Worth It?
College Presidents, Public Assess, Value, Quality and Mission of Higher Education
By Paul Taylor, Kim Parker, Richard Fry, D’Vera Cohn, Wendy Wang, Gabriel Velasco and Daniel Dockterman

Chapter 5: The Monetary Value of a College Education
Overview
The typical college graduate earns an estimated $650,000 more than the typical high school graduate over the course of a 40-year work life, according to a new analysis of census and college cost data by the Pew Research Center.

Of course, this difference doesn’t apply in all cases; some high school graduates are high earners, and some college graduates are low earners. Also, the monetary return to college is influenced by a variety of factors, including type of college attended and major field of study.

But on average—and after taking into account the fact that a dollar earned at the start of someone’s working life is more valuable than a dollar earned toward the end of that person’s working life18—the analysis finds that the typical or average high school graduate with no further education earns about $770,000 over a 40-year work life. The typical worker with a (two-year) associate degree earns about $1.0 million, and the typical worker with a bachelor’s degree and no advanced degree earns about $1.4 million.

Balanced against these work-life earnings differences are the upfront costs of time and money associated with getting a college degree. Today’s typical high school graduate ages 18 to 24 with no further education is paid about $23,000 working full time, full year. Thus, foregone earnings approach $50,000 for someone with an associate degree and approach $100,000 for someone with a bachelor’s degree, assuming that the undergraduate completes an associate degree in two years and a bachelor’s degree in four years.

The out-of-pocket expenses for tuition and fees vary significantly, depending on where the student attends college. The College Board estimates that, after student aid and federal income tax benefits are accounted for, the average tuition and fees paid is close to zero for students attending community colleges.19 For undergraduates attending in-state, public four-year colleges and universities, the College Board estimates that the average price after aid is about $1,500 per year. The typical student at a private, nonprofit four-year institution pays about $11,300 in tuition and fees per year after aid and tax benefits are considered.

When these costs of attending college and the foregone earnings are subtracted from the income benefits over the course of a lifetime, the net “payoff” from getting a college degree is still quite substantial. For a typical student who graduated from an in-state, four-year public university, this net gain is about $550,000, the analysis finds.

However, this average figure masks wide variations in the financial returns to a college education. On the benefit side of the equation, work-life earnings tend to be much higher for undergraduate majors requiring numerical competencies (computers and engineering) than other fields of study (education and liberal arts). In regard to costs, some colleges and universities have much higher tuition and fees than the typical in-state public institution. In addition, some undergraduates do not receive aid and may pay the full tuition and fees listed. About two of three undergraduates receive some form of grant aid, and the amount of grant aid tends to decline as the student’s family income increases.

Based on average earnings and cost data, some college degrees may not have generous payoffs. For example, the estimated total work-life earnings of a typical worker with a bachelor’s degree in education and no advanced degree are about $950,000. This exceeds the work-life earnings of the typical high school graduate by only $180,000. Foregone earnings alone would tally about $100,000. Four years of tuition and fees at some college and universities could exceed the remaining $80,000 benefit, particularly if the education major is from an affluent family and does not receive any grant aid or federal tax benefits.

The Pew Research estimates for work-life earnings are based on the current patterns of earnings differences by education in the most recent census data. However, returns to education in the labor market have changed over time. Extensive research on this subject shows that the payoff for a college education increased substantially during the 1980s, then, depending on the details of measurement, either increased slightly since the early 1990s or plateaued.20 Whether the returns to education will decline in the future is not known. Many economists would surmise that the future course of the financial returns to schooling in part depends on how many young people pursue and complete college. If college-educated workers become relatively less scarce, the financial returns to college might decline.

 

Good article.

 

Very good. I think that there will be more and more college grads as time goes on.