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For years, despite the rising cost of college, the increasing burden of undergraduate debt, and the difficulty college graduates have finding professional jobs, there’s been one number that explains why college is worth it: $800,000. That’s the difference between the lifetime earnings of a high school graduate and a college graduate. But that number might be false. According to an article in yesterday’s Wall Street Journal:
The problem stems from the common source of the estimates, a 2002 Census Bureau report titled “The Big Payoff.” The report said the average high-school graduate earns $25,900 a year, and the average college graduate earns $45,400, based on 1999 data. The difference between the two figures is $19,500; multiply it by 40 years, as the Census Bureau did, the result is $780,000.
Of course, as is often true with averages touted by policy organizations, that $800,000 was never a real number; it was a metaphor for the importance of college and a professional career. The trouble is, especially with the focus on education debt, many are now starting to think the metaphor was misleading.
One problem is that $800,000 doesn’t account for income taxes or occasional unemployment. It also doesn’t account for education debt
Mark Schneider of the American Institutes for Research decided to look at the numbers again. According to the article, Schneider:
Estimated the actual lifetime-earnings advantage for college graduates is a mere $279,893 in report he wrote last year. He included tuition payments and discounted earning streams, putting them into present value. He also used actual salary data for graduates 10 years after they completed their degrees to measure incomes. Even among graduates of top-tier institutions, the earnings came in well below the million-dollar mark, he says.
Of course that $279,893 figure Schneider arrived at in 2009 isn’t a small amount of money, but it’s pretty far away from $800,000.
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Bloix on February 03, 2010 5:43 PM:
Comparing average incomes is misleading, in that the people who go to college are on average more advantaged than those who don't - they have wealthier parents, better high school educations, living in areas with more opportunity. So you're not measuring the effects of college alone, you're also measuring the effects of other advantages.
What you really want to know is this: for an ordinary high school grad, is there any advantage to that individual in going to a 4-year college university, as opposed to learning a skilled trade or going directly to work in a business?
Texas Aggie on February 03, 2010 8:26 PM:
The answer to the question of whether there is any advantage to going to a 4-year college/university is what you want the education for. If you only are looking at income, then possibly it isn't worth it. If on the other hand, you are looking at benefits like a more enjoyable, useful life, with a wider outlook on the world, and association with more interesting people and activities, then it probably is.
pluge on February 03, 2010 9:51 PM:
the American disease is the LCD of all life into dollars and cents with no sense. This is what is known as a poverty of spirit, a vacuous soul, the living dead. Of course the value of enhanced learning and socialization is never accounted for because the bean counters that distill all life into coin can't easily put a value on the invaluable.
This unadulterated simpleton-think.
Justaguy on February 03, 2010 10:34 PM:
Yeah, there's a stronger correlation between your parents' income and yours than with educational attainment - so assuming that the difference in salary between college graduates and non-graduates doesn't really pan out.
SqueakyRat on February 04, 2010 12:34 AM:
Maybe being educated instead of ignorant should count for something.
drossless on February 04, 2010 1:03 PM:
OK, now AIR needs to adjust the data for unemployment. Because even more significant than the salary difference between those with and without college educations is the difference in unemployment rates.