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Is a College Degree Still Worth the Cost?

Graduated!You’ve probably heard the horror stories: recent graduates from well-known colleges and universities leave with a mountain of debt, can’t find a job, default on their loans, and move into their parents’ basements.

Against the background of headlines of soaring college costs, tales like this have prompted many to ask whether a college education is really worth the expense.

A 2011 study by the Georgetown Center on Education and the Workforce found that over his/her lifetime, the average college graduate will earn nearly $1 million more than someone who only has a high school diploma – and that the earnings gap is widening. In fact, the study found that the income advantage continues to climb with more advanced degrees:

Educational level                                                Advantage over high school diploma

Less than high school diploma                                              -$331,000

High school diploma                                                                    ―

Some college, no degree                                                         $270,000

Associate’s degree                                                                   $423,000

Bachelor’s degree                                                                    $964,000

Master’s degree                                                                      $1,367,000

Doctoral degree                                                                      $1,948,000

Professional degree                                                                $2,344,000

The Georgetown study also found that some people with less education made the same or more than the median income for those with higher educational achievement. For example, 14% of Americans who only held a high school diploma earned the same or more income than the average person with a bachelor’s degree. Similarly, 23% of those with some college courses under their belt but no degree equaled or outdid the lifetime income of those with a bachelor’s degree. But for most people, as the table demonstrates, average lifetime earnings are significantly higher for those benefits even stand when taking into account the rising cost of a college education. The Brookings Institute put it this way in a study it issued recently, “[W]hile college may be 50% more expensive than it was 30 years ago, the increase to lifetime earnings that a college degree brings is 75% higher. In short, the cost of college is growing, but the benefits of college…are growing even faster.

Unemployment Protection

In addition to better earnings prospects, a college education brings a second benefit: greater protection against unemployment. As of October 2012, the U.S. unemployment rate stood at 7.9%. But, according to the Bureau of Labor Statistics, among those at least 25 years old, the rate of those with a bachelor’s degree was just 3.8%, while those with only some college suffered an unemployment rate of 6.9% ― more than 80% worse.

Those with less education were even worse off. Among those with just a high school diploma, 8.4% were unemployed, while 12.2% of those who dropped out before earning a diploma were jobless. As the Brookings Institute put it, “Today, a college graduate is almost 20% more likely to be employed than someone with a high school diploma.”

What’s more, the job growth that occurred over the prior 12 months was entirely among the college-educated. On a seasonally adjusted basis, jobs for those with only a high school education actually declined 0.3%, while jobs for those with some college grew 3.6% and those with a bachelor’s degree grew 4.2%.


Despite these advantages to a college education, there are other considerations that temper this rosy outlook:

  • Majors matter. Not all college degrees are created equal. Recent graduates in the fine arts and liberal arts aren’t fating as well in employment or earnings as students who major in other subjects, like engineering, accounting, health sciences, and mathematics.
  • Ability and drive trump name colleges. Studies show that more expensive “name” colleges can give a career boost to some students, like those from low-income families and those in the first generation of their family to graduate from college. Otherwise, educators say ability, drive, character, grades, and SAT scores correlate more closely with career success than the prestige of the college form which a student graduates.
  • Minimize student debt. In order to stretch to meet the high cost of some colleges, students are tempted to take on ever-higher amounts of education loans. While a college degree improves the odds of landing a job right after college, debts that entail monthly payments rivaling those for a luxury car or an apartment can wind up limiting the graduate’s job flexibility or putting an unpleasant crimp in their lifestyle, even if they land a job. In the long run, it may be better to excel at a lower-ranked college than incur substantial debt to attend a higher-ranked one.

Please call if you’d like to discuss this in more detail.

Copyright © Integrated Concepts 2013. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. This newsletter intends to offer factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. The appropriate professional advisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material.

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