Millennials and College: Why Higher Education Might Not be the Best Choice for Generation Y
The other day, in responding to PolicyMic’s question on student debt to both presidential campaigns, the Obama campaign boasted that the president “believes higher education shouldn’t be a luxury — it’s an economic necessity for every American.”
The sentiment that everyone needs a college education to succeed in today’s economy is shared by liberals and conservatives alike, and seems deeply embedded in our “college for all” psyche. It is also flat-out wrong.
One of the biggest assumptions among Americans today is that going to college is significantly more important than getting a solid K-12 education, or perhaps vocational education. The proposition that college attendance is critical derives from several arguments, but primarily from the notion that the income differential over the lifetime of a college graduates versus a high school graduate is significant. The data, simply put, suggest otherwise: these arguments are far weaker than generally believed, and going to college may actually have harmful effects for many in our generation.
The income-differential argument is propounded by a tri-annual report from the College Board called “Education Pays.” The report shows that the unemployment rate among high school graduates was only around 5.1% higher than the rate among college graduates in 2009; in 2006, the differential was only 2.3%. These differentials, especially the 2006 number, are quite low and beg the question of whether a college education is worth the cost in terms of employment prospects. The report also shows that the typical recipient of a bachelor’s degree can expect to earn 66% more during a 40-year working life than the typical high school graduate over the same period. This only translates to a cumulative lifetime earning differential of between $300,000 and $400,000 when debt is subtracted. Again, that seems to be a rather small differential for lifetime earning. This differential is indeed much lower than the $1 million figure that politicians constantly offer, and which derives from data released by the U.S. Census Bureau that even College Board rejects.
Indeed, Charles Miller, the head of the Commission on the Future of Higher Education during the Bush administration, argues that even College Board’s figures are too high because it uses the present value of dollars rather than accounts for inflation; assumes that the average college student will graduate in four years; and assumes that college students pay in-state tuition to public universities. Accounting for inflation, longer graduation time, and private university tuition, Miller determines that the differential in lifetime earnings is only $279,893 on average.
Moreover, there is a big difference between a four-year degree and a community college or associate’s degree. According to College Board, the median yearly income of a high school graduate in 2008 was $33,800, while it was $67,300 for a college graduate; but it was only $42,000 for individuals with associate degrees — only about $8,000 more per annum. According to Bureau of Labor Statistics data, the 2012 median weekly earnings of a high school graduate was $626 compared with $1,038 for a graduate with a bachelor’s degree; but it was only $767 for holders of two-year degrees, or only $141 more per week.
Further, whether a four-year degree is more worthwhile than a high school education also depends on what one studies in college. A report issued by Georgetown University’s Center on Education and the Workforce has attempted to show the differences between different college majors in terms of unemployment and income. For example, recent college graduates in the field of computer engineering earn around $60,000 per year, whereas physiology majors make only $24,000.
In other words, going to college might pay off, but it depends on what you do there, and in any case the pay-off may not be all that much.
Another argument for going to college is that most jobs or future jobs will require a college degree. Again, the facts suggest otherwise. For example, Bureau of Labor Statistics data show that in professions ranging from flight attendants to retail salesperson, customer service representatives, secretaries, clerks, drivers, telemarketers, stylists, and repairers and installers, the proportion of workers with a college degree ranges only from 10% to 30%. The rest do not have college degrees. Indeed, the authors of a book published in 2000 present data “showing on one hand that jobs requiring a high level of education are increasing more slowly than those requiring somewhat fewer educational credentials,” whereas “jobs requiring less education are increasing faster than those requiring still less formal education.”
Perhaps a third argument, along these same lines, is that higher salaries result for college graduates because college completion is a signal to employers that a candidate can at least read and write more or less coherently, or has the drive to succeed. This very well may be true today; but as more and more people go to college, the signaling effect of the diploma will lose much of its force. Further, as non-college graduates gain experience, the earning differential between them and college graduates decrease as employers come to recognize that non-college graduates may have the same set of skills or obtain it with experience.
In short, we should be wary of jumping on the college-for-all bandwagon. For many, going to college may not be the right answer after all.