Cost of Not Going to College May Outpace Tuition Rates
Keeping pace with the rapidly rising monetary cost of college tuition is the increasing quality of life cost fixed on not going to college. A report by Pew, “The Rising Cost of Not Going to College,” surveyed adults across the country and found that not only is the importance of a college degree still central, but it is a key factor for a Millennial’s quality of life.
The findings are important given that the Department of Education reports that the overall cost of college (tuition, room, board, etc.) rose at public schools by 42 percent, and by 31 percent at private schools between the 2000/2001 and 2010/2011 school years.
Just as in previous generations, young adults with a college degree are earning more, are more likely to be employed, less likely to live in poverty, and are generally more satisfied with their jobs. For purposes of the report, Pew defines the millennial as being born after 1980. Members of Generation X were born between 1965 and 1980, anyone born from 1946 to 1964 is a Baby Boomer, and the Silents are those with birth dates from 1928 to 1945.
The key differences between now and then is that the gap between the two education segments is growing. One example is annual income and poverty levels. Measured in 2012 dollars, the median income of a college educated Millennial was $45,500 in 2013, $17,500 higher than a high school educated peer’s $28,000. Between Generation Xers, the gap was $15,780, and late Baby Boomers saw a $14,245 differential in income. When only a high school education had been obtained for a young adult in 2013, 22 percent reported living in poverty. Fifteen percent of Generation X’s high school educated faced the same situation in 1995, and 12 percent of late Baby Boomers lived in poverty in 1986.
Simply having a college education does not secure a Millennial a higher quality of life. That, the report indicates, happens once they get a foot in the door. Compared to previous generations, a college educated Millennial has more difficulty securing a job, but once they are employed, they earn more money than previous generations did at the same point in their careers and lives. At the same time, when a Millennial is employed but does not have a college education, their earnings are below what their historic, non-college educated peers earned.
College educated Millennials had an unemployment rate of 3.8 percent in 2013. This is higher than their historical counterparts; college educated Boomers in 1979 faced an unemployment rate of 2.5 percent. However, with contemporary peers, the rate is significantly lower for Millennials with a college diploma. The unemployment rate of a Millennial with only a high school education in 2013 was 12.2 percent.
Even when they do face unemployment, the evidence suggests Millennials with a college education are spending less time looking for work than those without. When a job is found, a Millennial who has a degree is more likely to be employed full-time, 89 percent versus 82 percent. This gap was appears to have grown over time; in 1979, it stood at only 3 percentage points.
The survey suggest that with a college degree, Millennials are more likely to hold a job that is a career, or it places them on a career path when they have obtained a college education — as 86 percent indicated this was the case. The group with a high school education agreed to this sentiment 57 percent of the time, and 42 percent of the time described themselves in a job in order “to get by.” Only 14 percent of college graduates stated they were in the latter position.
Given these statistics, it isn’t entirely surprising that Millennials also reported their college educations were worthwhile. Even when the cost of that education is a factor, 91 percent who hold a bachelor’s degree believe the education has paid off. That high percentage is on track with how earlier generations valued their college educations, but Millennials were more likely to need loans to finance their undergraduate degrees. The rate has risen sharply since the late Baby Boomers went to college, when only 43 percent needed loans, while 66 now percent report using loans to pay for college.
Broadly speaking, those with higher education do not regret their choice of major. But, regret is highest among liberal arts, social science, and education majors with 33 percent wishing they had selected a different major. For science and engineering majors, 24 percent held the same view. The science and engineering majors were also the group most likely to be employed at a job that is somewhat closely, or very closely related to what they studied (78 percent). Social science and liberal arts majors had the lowest proportion (60 percent) agree with that statement.
Knowing the value educated Millennials assign to their degrees and the positive, real world implications of having one is important not only from a personal investment standpoint, but for policy as well. Lawmakers around the country are concerned with legislatively solving soaring costs. As more people become aware of college’s central role in employment and economic well-being, initiatives like Governor Bill Haslam’s (R-Tenn.) “Tennessee Promise,” centered on reducing higher education costs, will have a higher chance of success.
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