Does It Pay to Get a Degree? The Rising Costs of Not Going to College
As more and more Americans find themselves dealing with student loan debt — it’s now topped $1 trillion — many millennials are questioning whether getting a degree is worth it. According to a study released by the Pew Research Center, it does still pay to get a degree. In fact, the report shows the earnings gap between young adults with and without bachelor’s degrees has stretched to its widest level in nearly half a century.
So what does that mean? Despite rising tuition costs, it’s still beneficial to obtain your bachelor’s. It may not be easy to see in the short term, but it will pay off in the long run.
College degree versus high school diploma
According to the study, on virtually every measure of economic well-being, from personal earnings to job satisfaction to those employed full-time, young college graduates are outperforming their peers with less education, despite the fact that young, college-educated workers are having a harder time landing work compared to earlier generations. Unfortunately, mostly in part to a struggling economy, they are more likely to be unemployed, and it takes them longer to find a job.
But it’s worse for those with just a high school diploma.
“For less-educated young workers, there is no upside: They are more likely to be unemployed and they are spending more time searching for a job compared with less-educated young workers who came before them. And their earnings are significantly below those received by less-educated young workers in earlier generations (with the exception of high school-educated Gen Xers),” according to the Pew Research Center.
Furthermore, when you compare today’s young adults to previous generations, the disparity in economic outcomes between college graduates and those with a high school diploma or less formal schooling has never been greater, according to the report. Young adults with only a high school diploma earned 62 percent of the typical salary of college graduates, down from 81 percent in 1965.
A separate Pew research study, titled “Is College Worth It?“, found that 86 percent of college graduates say college has been a good investment for them. “In today’s knowledge-based economy, the only thing more expensive than getting a college education is not getting one,” Paul Taylor, Pew’s executive vice president and co-author of the report, said. “Young adults see significant economic gains from getting a college degree regardless of the level of student debt they have taken on.”
Not only did the report find that a college degree yields more inflation-adjusted earnings, but it also found that a high school diploma is virtually worthless. The study found that college graduates ages 25 to 32 who are working full time now earn about $17,500 more annually than employed young adults with only a high school diploma ($45,500 compared to $28,000).
According to an analysis of Labor Department statistics by the Economic Policy Institute in Washington, Americans with four-year college degrees made 98 percent more per hour on average in 2013, compared to those without a degree.
Additionally, one Washington Post article reports that college graduates make more than $500,000 more over the course of their lifetimes, on average, which works out to an annual return of around 15 percent each year.
Even a two-year degree yields benefits, with the study stating that those with a two-year degree or some college training earned $30,000. Today’s income gap is drastically higher than in 1965, when the inflation-adjusted gap was $7,449, according to the Pew study.
Young adults with only a high school diploma are now much more likely to live in poverty, with the rate at 22 percent today compared to 7 percent in 1979.
“Despite their higher levels of college completion, today’s young adults overall are doing no better – and on many key indicators of economic well-being, they’re doing worse — than older generations were doing when they were the same age that millennials are now,” said Taylor, per the Associated Press. “This is mainly because the economic penalties for not getting a college degree are so much stiffer now than in the past.”
Even attending school and dropping out before a degree is obtained yields benefits, according to The Washington Post. On average, college dropouts make $8,000 more than high school graduates without any college experience, which amounts to $100,000 over their lifetimes.
The difference between a college degree and high school diploma also impacts the way people view their jobs, according to the report. Young employed college graduates are more likely to view their job as a career or a stepping stone to a career, while those with a high school diploma or less were three times more likely to describe their work as “just a job” (42 percent, compared to 14 percent).
Is college worth it?
Tuition continues to increase at both public and private colleges, prompting a number of discussions about the increasing levels of student debt. Despite that, most college graduates agree that college has still paid off. In fact, 83 percent of bachelor’s degree holders believe they have already seen a return on what they and their family paid for their degree. An additional 8 percent say it hasn’t paid off yet but that they believe it will in the future. Only 6 percent of college graduates say college hasn’t paid off for them and that they don’t expect it to in the future.
Nine in 10 adults with a bachelor’s degree or more education — 91 percent to be exact — say that “considering what they and their family paid for their undergraduate education, it has paid off for them or they expect it will pay off in the future.” Furthermore, that same sentiment is shared by an even higher proportion, 96 percent, of those who have a graduate or professional diploma.