“Is college a lousy investment?” This was the question posed in a Newsweek cover story in the fall, a blunt challenge to America’s long-standing, nearly sacrosanct belief in the value of a college education. Writer Megan McArdle argues that an increasing number of college graduates are leaving campus, degree in hand, with mountains of student debt, only to wind up behind a counter at Starbucks (an anecdote so prevalent that Jordan Weissmann, writing for The Atlantic, dubs it “the barista principle”).
The lingering economic recession, a weak job market, and rising tuition costs have given rise to a proliferation of national media stories questioning the value of higher education. This disillusionment is resonating with a growing number of Americans; a 2011 Pew Research study found that over half of Americans (57 percent) now believe U.S. colleges and universities fail to provide students with good value for the money. Our faith in the American dream — and higher education’s ability to provide access to it — has been shaken.
Of course, college’s return on investment in strict financial terms depends on how much you paid for your degree and the marketability of your chosen field. Some students reap greater financial rewards than others. But to promote the belief that college is no longer a wise investment is a grave disservice to parents and students everywhere. Not only is this line of argument inaccurate; it is dangerous.
While a college credential does not guarantee economic security, the lack of a credential most certainly places individuals at greater risk of poverty and limits earning potential for years to come. And as a nation, falling rates of educational attainment undermine our future economic growth and competitiveness.
A report released last summer by Georgetown University’s Center on Education and the Workforce, “The College Advantage: Weathering the Economic Storm,” provides something the Newsweek piece does not — statistical evidence. The report looks at employment trends by education level dating back to the late 1980’s. The verdict? The benefits of a college credential far outweigh the costs, even and especially during the recent economic recession. Consider the following findings:
♦ Nearly 80 percent of the 7.2 million jobs lost during the recession were held by people with a high school diploma or less, while jobs for individuals with at least a bachelor’s degree actually increased by 187,000.
♦ Since early 2010, when the national recovery began, employment for bachelor’s and graduate degree holders increased by 2 million, and employment for individuals with an associate degree or some college increased by 1.6 million. In contrast, people with a high school diploma or less continued to fall behind, losing 230,000 jobs.
♦ Among recent college graduates the unemployment rate is 6.8 percent, higher than the 4.5 percent for college graduates overall. But both rates are substantially lower than the unemployment rate among recent high school graduates, which is 24 percent.
Furthermore, the report reaffirms the once-popular Kentucky marketing slogan, “Education Pays.” College graduates continue to enjoy substantially higher wages than high school graduates, and this advantage accrues over time. In 2010, a U.S. bachelor’s degree holder made, on average, nearly twice as much as a high school graduate. An associate degree holder made around 20 percent more. Over a lifetime, a bachelor’s degree holder can expect to earn 84 percent more than a high school graduate.
Intrigued, I asked my research staff if they could replicate these findings using Kentucky data. The results are outlined in a new Council on Postsecondary Education policy brief, “College Still Pays.”
Some highlights include:
♦ Kentucky workers with a high school diploma or GED are twice as likely to be unemployed than those with a bachelor’s degree. The unemployment rate for the former is 10 percent, compared to 5 percent for the latter. For workers without a high school diploma or GED, the unemployment rate is 16 percent.
♦ Over a lifetime, this pay difference adds up. Kentuckians with associate degrees or some college can expect to earn $289,000 more than high school graduates over a 40-year career, using an annual wage increase of 1 percent. College graduates can anticipate an additional $879,000 in earnings, while those with graduate degrees stand to earn an additional $1.34 million.
Yes, college affordability is a real problem, and yes, job creation has been sluggish, but students can obtain a postsecondary degree in Kentucky without racking up unsustainable debt. According to the Project on Student Debt, the average student loan debt in 2011 ranged from a low of $17,250 (Utah) to $32,450 (New Hampshire). Kentucky’s average student loan debt was $22,287, substantially lower than the national average of $26,600.
Four-year colleges and universities offer numerous grants, scholarships, and work study opportunities to make college more affordable. Community and technical colleges offer numerous associate degrees and certificates in high-paying, high-demand technical fields that can be completed in two years or less. High school students can reduce college costs by taking advantage of Advanced Placement, dual credit, and CLEP exam options.
In short, the media’s hand-wringing about college’s value is not supported by facts. In stories like McArdle’s Newsweek piece, “college” is narrowly defined as an expensive liberal arts degree from a highly selective university. In fact, “college” includes credentials earned at community and technical colleges as well as four-year universities.
Some of the industries with the highest projected job growth in Kentucky are advanced manufacturing, health care, and information technology, all of which require some training beyond high school. Experts predict that by the year 2020, 56 percent of Kentucky’s jobs will require some postsecondary education. Individually and collectively, college continues to offer a high rate of return and the best chance of achieving long-term security and prosperity. There is really no safer investment we can make.