Is a Bachelor's Degree Worth It?
May 9, 2011
Nearly everyone has heard the soothing words that the average lifetime earnings of college graduates is a million dollars higher than those of high school graduates. But Mark Schneider, vice president of the American Institutes for Research, conducted a study for the American Enterprise Institute that pours cold water on that figure, says the John W. Pope Center for Higher Education.
- He found that average lifetime earnings advantage for college graduates is well below the million-dollar figure when forgone wages and the cost of a college education are factored in.
- Incorporating those figures and using the Department of Education's 2003 Baccalaureate and Beyond Longitudinal Study, Schneider estimated that the lifetime earnings advantage for college graduates ranges from $150,000 to $500,000.
- The differences reflect earnings from open admissions schools to selective private schools.
And of course the premium isn't consistent across industries or employees:
- The Census Bureau's 2009 Current Population Survey shows that 20 percent of individuals making less than $20,000 per year have bachelor's or master's degrees.
- Recent graduates, age 24 and under, are experiencing a jobless rate of nearly 10 percent.
Even more problematic for future generations is that the gains from college aren't growing over time.
- In 1991, young workers with bachelor's degrees earned, on average, 1.48 times the amount that those with only high school diplomas earned.
- Young college graduates' earnings peaked in 2000 at 1.68 times that of diploma-holders, then declined to 1.54 percent in 2009.
- Keep in mind that the price of tuition increased nearly 300 percent during this same period.
Right now, a bachelor's degree is still a good option for many students. However, as prices continue to rise and gains in academic achievement and lifetime earnings stagnate, the bubble -- the discrepancy between cost and value -- will inflate further.
Source: Jenna Ashley Robinson, "The Value of a Degree," John W. Pope Center for Higher Education, May 6, 2011.
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