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College degrees expensive but also really valuable

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Will drum for collegeWe hear a lot these days about the crushing burden of college debt on today’s college graduates. But one thing that’s tougher than having to deal with the rapidly rising cost of college and skyrocketing student loan debt is the financial burden of not going to college at all.

A recent review of census data by the Pew Research Center found that college graduates make a lot more than less-educated workers, and that the gap is growing rapidly.

Between 1991 and 2012, the average household income of a householder with a bachelor’s increased from $92,289 to $100,637, while income for households with a high-school education fell from $54,707 to $52,199. Over the course of a 40-year career, that difference would add up to almost $2 million less in lifetime earnings for those with only a high-school diploma.

Making it all the way through a bachelor’s degree seemed to be the key; those with “some college” or an associated degree also fell by 5 percent between ’91 and ’12. If that’s not enough, the current unemployment rate for those with a high school diploma is 7.6 percent; for those with a college degree it’s 3.5 percent.

Of course, your mileage may vary; some kinds of degrees, and degree holders, are destined to generate more money than others, and some graduates who are employed aren’t doing anything related to their major. But it seems clear that if you have the opportunity to snag a college degree from a reputable school, you should. Even if you have to take on a substantial amount of student debt — $26,600 per borrower is the average these days, according to a 2012 report by The Institute for College Access and Success — these figures suggest it’s well worth it over the course of a typical lifetime.

College-educated increase their income advantage

Also, while people rightly complain about the fact that 4-year costs at some schools has ballooned beyond the $200,000 mark, you don’t have to nearly that much to get a serviceable college education. Worrying about what expensive private schools like Princeton and American University are charging is sort of like complaining about the cost of a Bentley when all you need to get where you’re going is a Honda Accord.

Down here in lovely South Florida, you can attend Palm Beach State College, a former community college that recently began offering some bachelor programs, for just under $3,000 a year in tuition and fees. After two years there, you can transfer to Florida State University (incidentally, my alma mater) for around $6,600 a year and graduate with a diploma from FSU for just over $19,000 in total cost. That’s still a lot of money, but it’s less than the cost of one semester of tuition at good ol’ Princeton which is $41,750 per year.

Now of course there are benefits to going to Princeton that you won’t get with an FSU diploma, such as rubbing elbows with future presidents. But at least it will get you going on those lines going up, and not the ones going down.

(Photo: Joselito Tagarao) (Chart: Pew Research Center)

{ 5 comments, please add your thoughts now! }

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5 Responses to “College degrees expensive but also really valuable”

  1. RGM says:

    The statistics do not lie, but there are always exceptions. I do not have a degree from any university and over my career have managed people with Masters degrees. My key to success has been understanding what my clients and bosses wanted and working to accomplish that. I am a very resourceful person who “makes it happen” I have been very fortunate to have some great mentors and managers and have worked very hard for them. A BS degree is great if you have the wherewithal to get one. I may at some point return to school and get my degree, but I may not. The costs are outrageous, and would be a huge time investment and at this point other than the personal satisfaction, I don’t know what “value” it would add to my performance or capabilities in my current or future roles.

  2. chriscd says:

    And having a degree opens up so many more doors when you are trying to land an interview. I do not have one and when I was looking, so many places just turned me down for that reason alone. After all, when you are receiving hundreds of applications, you have to have a way to filter them, and degrees are often the first way.

    That being said, I did eventually land a very good job and do quite well. This job was because of the friends I knew. So, I also wonder, did College potentially provide better networking opportunities as well (although that was not my case).

  3. Claes says:

    RGM and chriscd: First off, thanks for reading, and thanks for your feedback. My point is that the average person with a college degree will tend to do better over the long term than the average person who doesn’t. That being said, college is no substitute for hustle, which I think is actually a more important predictor of future success than education or almost anything else. It’s absolutely possible for motivated, smart people with no college education to do well, as both of you guys demonstrate. And it’s also totally possible for people with tons of awesome, expensive education credentials to be lazy and do zilch with their life.

  4. freeby50 says:

    As far as the financial value of a degree it really depends on the major choice. A music history degree has a lot less economic value than a petroleum engineering degree.

  5. Kenny says:

    Exceptions aside, here is my view.

    Education is really NOT being given the importance it should be given.

    Kids go to college without an idea of what they want to do. This game of ‘individuality’ has gone too far, and young minds are given too much responsibility to completely decide on their own, and then change their mind. 60% of the kids do NOT know what they want to graduate in by March of the 4th semester in college. This is FUN for Universities charging $3K to $8K per course.

    Kids do earn some big bucks if they work hard through the 4 years and not make college a ‘fun place to go’ with tons of independence.

    Focused kids who I know are doing $80K to $110K from ordinary universities with degree in Finance, Healthcare and IT. Imagine earning that at age 22-24.

    Kenny


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