Higher education is costly, but it is also a good investment. There are many studies that make this apparent, such as the College Board’s triennial report, Education Pays (Ma et al. 2019).
Having college education linked to higher pay, job security, and other societal benefits seems like a no-brainer. However, there is more to this equation than meets the eye. As we’ll find out, other factors such as occupation, gender, and race and ethnicity also impact remuneration.
The cost of getting a college degree continues to rise. Checking up on records, the cost of college in the 1970s in today’s equivalent was anywhere in between $17,000 and $18,500 for a private university (Hess, 2019). Going to a public one could set you back between $8,000 to $9,000. In 2019, based on published or sticker prices on the Trends in College Pricing Highlights, a private university costs about $37,650, while studying in public four-year out-of-state university costs around $27,020 (Ma et al., 2020).
These figures are causing a lot of students and their families to question the value of a college degree, especially with federal and private student loans already totaling $1.6 trillion. However, based on return of investment alone, data shows that people with the highest educational attainments earn more than triple compared to individuals who have the lowest levels of education (Torpey, 2018). When it comes to employment, Bureau of Labor Statistics data shows that college education and job security also have a direct correlation. The unemployment rate among people who have a doctoral degree was at 1.5% compared to 6.5% for people who have less than a high school diploma in 2017 (Torpey, 2018).
Source: Bureau of Labor Statistics 2017
As evident from the BLS data, educational attainment has a considerable impact on one’s earnings. In terms of economic benefits, obtaining a post-secondary credential is almost always an investment that pays off. There are more studies that support this assertion.
Comparing key findings from the 2016 and 2019 Education Pays report, we see that the results are consistent through the years when it comes to income. For example, in 2018, the median salary of full-time, year-round workers aged 25 and older with a bachelor’s degree is $65,400—$24,900 more than the median salary of individuals who possess a high school diploma (Ma et al., 2019). In the previous report, the median earnings of bachelor’s degree holders were $24,600 higher than those of high school graduates (Ma et al., 2016).
Another in-depth study looked at the differences in lifetime earnings based on educational attainment. It revealed that someone who has a bachelor’s degree could expect to earn 84% more over a lifetime than someone with a high school diploma, which was up from 75% in 1999 (“The College Payoff,” 2011, p. 2). The estimated lifetime earnings of a high school diploma holder were $1.3 million compared to $2.3 million for someone who has a bachelor’s degree.
Moreover, lifetime earnings go all the way to the graduate level. The figures are $2.7 million, $3.3 million, and $3.6 million for a master’s degree, doctoral degree, and professional degree holder, respectively.
Data from 2019 on median household income in the United States also indicate the same pattern of higher earnings for highly educated people. Individuals who had the highest median household income—$162, 127—were people with professional degrees. Meanwhile, the lowest median household income—$30,355—was for people with less than a 9th-grade education (Duffin, 2020).
People with higher education are also more likely to have secure jobs, as evidenced by the unemployment rate in different degree levels. In 2015, among 25-to 34-year-olds bachelor’s degree holders, the unemployment rate was 2.6% compared to 8.1% among those with a high school diploma (Ma et al., 2016). This trend is also consistent with data presented in the BLS report in 2017, where it shows a higher unemployment rate—4.6%—among people who only finished high school. For comparison, the unemployment rate for those who finished a bachelor’s degree was 2.5%, 2.2% for those with a master’s degree, and 1.5% for people who have a professional degree and doctoral degree (Torpey, 2018). Also, US college trends and statistics data show that as of 2018, 83% of people with a bachelor’s degree were employed, while it was 68.8% for people with a high school diploma.
Higher education is beneficial not only to the individual but also to the country. People with post-secondary degrees have a better chance of improving their quality of life and going up the social ladder. Case in point: the poverty rate among bachelor’s degree holders is 4%, while it is 13% for people who only have a high school diploma. Additionally, people with a college degree pay more taxes, are more engaged in civic work, and are more likely to save up for retirement and have health insurance (Ma et al., 2019).
Source: Bureau of Labor Statistics 2017
What’s clear so far is that a college degree—or the lack of it—affects an individual’s earning potential. However, this is not an absolute rule. The actual job or work performed also impacts income. Someone who has less education can sometimes make more than their highly-educated counterparts.
For example, 31% of high school dropouts earn more than people who successfully finished high school, while 37% of high diploma holders take home bigger paychecks than people who have some college education. Furthermore, 28% of people who only have associate degrees earn more than those who have a bachelor’s degree, and 40% of bachelor’s degree holders make more than master’s degree holders (“The College Payoff,” 2011, p. 3).
Some examples of top-paying occupations for people who have less than a high school diploma include Construction Equipment Operators, Industrial and Refractory Machinery Mechanics, and Construction Managers. For high school diploma holders, top-paying jobs include Electricians, Postmasters and Mail Superintendents, and General and Operations Managers.
Keep in mind, though, that even if there are situations where the actual occupation wins over education level, having a college degree is still more advantageous within individual occupations. Based on a survey by the College Board and US Census Bureau, 2013 to 2017 median income of people who hold a bachelor’s degree or higher was always more than those with only a high school diploma in the same occupation. The median income of bookkeeping, accounting, and auditing clerks, for instance, with only a high school diploma was $37,200 compared to $42,900 for those who have a bachelor’s degree or higher (Duffin, 2020).
Data show that a college degree can still be overshadowed by certain factors like gender when it comes to remuneration. Based on 2019 mean earnings by gender and educational attainment, women earned less than men at all levels of education (Duffin, 2020). Meanwhile, men with some college but no degree earn lifetime earnings around the same as women with a Bachelor’s degree. For the lifetime earnings of women to come close to that of men with a bachelor’s degree, they would need to obtain a doctoral degree (“The College Payoff,” 2011, p. 7).
Similarly, race and ethnicity seem to also play a role in how much an individual earns at the same education level. Data from the U.S. Census Bureau and the U.S. Department of Commerce show that 2019 mean earnings of Hispanics with a bachelor’s degree were $58,722, African Americans, $61,720; Asians, $78,148; and Whites, $80,214. At most education levels, Whites topped the income list, while Asians had the highest mean earnings at the masters and doctoral levels (Duffin, 2020).
Moreover, the median lifetime earnings of Hispanics and African Americans with master’s degrees do not go past the median lifetime income of Whites with bachelor’s degrees. Asians who hold postgraduate degrees, on the other hand, earn more in a lifetime than all races at the same education level (“The College Payoff,” 2011, p. 7).
Though there are many factors that influence income, the data is clear: those who pursue higher education and obtain their degrees also increase their chances of securing jobs that pay higher salaries. Indeed, there are high paying occupations that don’t require a college degree. However, several studies we cited here point to the reality that workers who have a college degree still earn more for the same job compared to those without.
Another important point to consider is lifetime earnings. We see that across all races and ethnicities and in both genders, those who obtain post-secondary credentials earn more over the course of a lifetime. People who have less than a high school diploma, across all races and ethnicity, do not reach $1,000,000 in lifetime earnings. On the other hand, people who obtain their degrees can have lifetime earnings of anywhere between $3,000,000 to $4,000,000 (“The College Payoff,” 2011, p. 7).
But it’s also important to remember that a college degree is more than just the money. Based on the studies we presented here, higher education is also a source of many other societal benefits and can help individuals gain the prerequisites to leading a comfortable and fulfilling life. Just think of the fact that college graduates are 47% more likely to have health insurance through their employment, and their employers contribute up to 76% to their health coverage (“How does a college degree improve graduates’ employment,” n.d., para. 4).
A college degree also provides professional versatility since you can apply your degree to multiple fields, have more options when it comes to jobs, and continue adding to your experiences and skills throughout your career journey. In other words, a degree gives you not only money but also the longevity of a profession.