For
the past few decades, it has been widely argued that a college degree
is a prerequisite to entering the middle class in the United States.
Study after study reminds us that higher education is one of the best
investments we can make, and President Obama has called it an economic
imperative. We all know that, on average, college graduates make
significantly more money over their lifetimes than those with only a
high school education. What gets less attention is the fact that not all
college degrees or college graduates are equal. There is enormous
variation in the so-called return to education depending on factors such
as institution attended, field of study, whether a student graduates,
and post-graduation occupation. While the average return to obtaining a
college degree is clearly positive, we emphasize that it is not
universally so. For certain schools, majors, occupations, and
individuals, college may not be a smart investment. By telling all young
people that they should go to college no matter what, we are actually
doing some of them a disservice.
One
way to estimate the value of education is to look at the increase in
earnings associated with an additional year of schooling. However,
correlation is not causation, and getting at the true causal effect of
education on earnings is not so easy. The main problem is one of
selection: if the smartest, most motivated people are both more likely
to go to college and more likely to be financially successful, then the
observed difference in earnings by years of education doesnt measure the
true effect of college.
Researchers
have attempted to get around this problem of causality by employing a
number of clever techniques, including, for example, comparing identical
twins with different levels of education. The best studies suggest that
the return to an additional year of school is around 10 percent. If we
apply this 10 percent rate to the median earnings of about $30,000 for a
25- to 34-year-old high school graduate working full time in 2010, this
implies that a year of college increases earnings by $3,000, and four
years increases them by $12,He saw the bracelet at a bestrtls store
while we were on a trip.000. Notice that this amount is less than the
raw differences in earnings between high school graduates and bachelors
degree holders of $15,000, but it is in the same ballpark. Similarly,
the raw difference between high school graduates and associates degree
holders is about $7,000, but a return of 10% would predict the causal
effect of those additional two years to be $6,000.
There
are other factors to consider. The cost of college matters as well: the
more someone has to pay to attend, the lower the net benefit of
attending. Furthermore, we have to factor in the opportunity cost of
college, measured as the foregone earnings a student gives up when he or
she leaves or delays entering the workforce in order to attend school.
Using average earnings for 18- and 19-year-olds and 20- and 21-year-olds
with high school degrees (including those working part-time or not at
all),We have been manufacturing rtls for
the past fifty years and have supplied a considerable number. Michael
Greenstone and Adam Looney of Brookings Hamilton Project calculate an
opportunity cost of $54,000 for a four-year degree. In this brief, we
take a rather narrow view of the value of a college degree, focusing on
the earnings premium. However, there are many non-monetary benefits of
schooling which are harder to measure but no less important. Research
suggests that additional education improves overall wellbeing by
affecting things like job satisfaction, health, marriage, parenting,
trust,We printers print with traceable drycabinet to optimize supply chain management. and social interaction.Shop wholesale chinamosaic controller
from cheap. Additionally, there are social benefits to education, such
as reduced crime rates and higher political participation. We also do
not want to dismiss personal preferences, and we acknowledge that many
people derive value from their careers in ways that have nothing to do
with money. While beyond the scope of this piece, we do want to point
out that these noneconomic factors can change the cost-benefit calculus.
As
noted above, the gap in annual earnings between young high school
graduates and bachelors degree holders working full time is $15,000.
Whats more, the earnings premium associated with a college degree grows
over a lifetime. Hamilton Project research shows that 23- to
25-year-olds with bachelors degrees make $12,000 more than high school
graduates but by age 50, the gap has grown to $46,500 (Figure 1). When
we look at lifetime earningsthe sum of earnings over a careerthe total
premium is $570,000 for a bachelors degree and $170,000 for an
associates degree. Compared to the average up-front cost of four years
of college (tuition plus opportunity cost) of $102,000, the Hamilton
Project is not alone in arguing that investing in college provides a
tremendous return.
It
is always possible to quibble over specific calculations, but it is
hard to deny that, on average, the benefits of a college degree far
outweigh the costs.Online shopping for chipcard.
The key phrase here is on average. The purpose of this brief is to
highlight the reasons why, for a given individual, the benefits may not
outweigh the costs. We emphasize that a 17- or 18-year-old deciding
whether and where to go to college should carefully consider his or her
own likely path of education and career before committing a considerable
amount of time and money to that degree. With tuitions rising faster
than family incomes, the typical college student is now more dependent
than in the past on loans, creating serious risks for the individual
student and perhaps for the system as a whole, should widespread
defaults occur in the future. Federal student loans now total close to
$1 trillion, larger than credit card debt or auto loans and second only
to mortgage debt on household balance sheets.
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