So my third “is College Worth It?” myth-buster topic is related to the payback college graduates receive. The current rumor is that college is a bad investment because the payback is not what it used to be. College grads aren’t getting jobs like they used to and their degree doesn’t seem to make any difference.
It is true that college graduates are not getting jobs like they used to, but the reality is that it has very little to do with college. AMERICANS are not getting jobs like they used to, and college-aged graduates are just the most vulnerable group in that larger trend. Underemployment of college grads has definitely risen as the economy seems to be producing less of the kind of jobs new college grads are hoping for.
Even in a less-rewarding market, however, college is still the best ticket for most students. A recent report by the Educational Advisory Board reported that in a recent survey only 32 percent of the public agree that “college is a good investment.” But the same research indicated that the earnings differential (the amount of additional money a college graduate will earn above what a high school graduate would earn) is at 1.8, which is an all-time high. In other words, if the high school graduate earned $1 million over a working lifetime, the average college grad would earn $1.8 million. That’s not a bad payback from pure economics.
That’s just an average, however, and many non-college graduates also earn well. In fact there is a strong demand in the market right now for workers trained in the skilled trades. This demand is growing more accute as recent generations have been told that college is the only path to success, and the trades workforce has aged considerably. But college graduates also enjoy some additional benefits. Importantly, they tend to be more insulated from downturns in the job market. In the recent years of job loss, the unemployment rate for those with only a high school degree has been nearly twice that of college graduates. Technology also favors college grads, who are less likely to be replaced by automation.
But the key to getting the economic benefit is graduation. Data from the Pew Research Center indicates that only about 56 percent of students who start college obtain a degree in six years. As Bloomberg Business week indicates, if you don’t actually finish the degree you lose most of the benefit and you are out both the tuition money and the time you could have otherwise been working.
So while college may still be the right investment, it is important to invest wisely. Students need to make sure they are selecting an institution that really is a right fit and at which their chance of success is high (read: less distraction). And families can plan ahead to make graduation as likely as possible. It has never been easier for students to earn college credit before starting, for example. Dual enrollment, AP courses, and CLEP testing are all easily accessible ways to get a few early credits to help get student a little closer to graduation. Taking a course as a dual-enrolled student is also a good way to get a better sense of the college environment. Students should plan to take full credit load whenever they can, and make the most of winter and spring enrollment options. The longer your college experience extends, the less likely you will finish.
Advanced credits also protect against the other factor that also reduces the value of a college investment – student loan debt. These credits are typically cheaper than regular enrollment, reducing potential debt. To top it off, the best insurance for improving the average earning of college graduates is (drum roll)…an advanced degree. In many ways, a graduate degree has become the new 4-year degree. The shortened time-frame and reduced debt possible through advanced credits can help make both the time-to-degree and the cost of a graduate degree attainable for students who might not otherwise be ready to take on more schooling.
So the bottom line is that college is still the best investment if your goal is a college-grad style job. If so, your focus should be on making a wise investment in an education you can complete and that will set you up for the future.
For a related topic, see my previous post about where to go.