Is Your College Degree Actually Worth It?
By Ian Nemelka
The average cost for a typical four-year degree is about $140,000. Moreover, if the income that could have been earned during those years spent as a full-time student is taken into account, the true cost is closer to a quarter of a million dollars. For such a high price tag, one would expect the value of any degree to be settled, but what is the actual return on your investment? The good news is research shows the prestige of one’s college or university has little impact on potential financial returns. The unfortunate news is that same research shows the particular degree you are pursuing might be a bad investment regardless of what institution you attend.
So, what is the actual value of your degree? Former Director of Academic Programming at Strata and Political Scientist James Harrigan along with his Economist colleague Antony Davies have recently released several op-eds on this topic. Their conclusion? “If done right, college is a great investment. If done poorly, it can be a disaster.” With so much time and money on the line, a fair amount of due diligence is needed to determine whether you are doing it right or wrong.
In their latest piece, James and Antony cite a Census Bureau and a Korn-Ferry dataset. Out of the 145,000 surveyed jobs “the average entry-level job requiring a college degree pays $25,000 more per year than the average entry-level job requiring a high school diploma. That means the average college graduate could pay off that average $30,000 college loan in a little over one year.” That’s good news for college goers, but the authors also impart a caveat. “. . .this assumes that the student chooses a major that imparts marketable skills.”
Just because society values a particular career field does not mean it pays well. An influx of college graduates passionate about doing a specific job creates an oversaturated market, making the skill set less valuable. During their weekly podcast called Words and Numbers, James and Antony illustrate this point perfectly when they discuss the relatively low starting salary of early childhood education majors. “ . . This is not to say that early childhood education is not important. That’s not it at all. . . The market is sending us a signal that we’ve devoted so many resources to that endeavor, it’s not necessary to devote anymore.”
Like the ebb and flow of scarcity within a market; the individuals armed with a scarce skill set, like petroleum engineering, will be valued far higher than those with a common skill set, like early childhood education. Society isn’t ‘totally screwed up’ because an engineer gets paid more than a teacher. If anything, this system ensures that what we value the most is in high supply and cheap, making it accessible to as many as possible. If you are looking to get the most bang out of your buck, it is vital to assess the investment you are making into your current degree, and take James’ and Antony’s advice to heart.
“Of course there is more to an education than a paycheck. If your dream is to educate children or to work in any of the lesser paying fields, go with God. But do so with open eyes. A quarter of a million dollar investment is not something to be made without clear and sober forethought.”
Strata is committed to education in and out of the classroom. Take a look at our free-to-access courses: https://www.strata.org/academicprograms/
Listen to James and Antony on their podcast Words and Numbers sponsored by the Foundation for Economic Education every Wednesday: https://fee.org/shows/audio/words-numbers/ or where you get your podcasts.
Read more on the subject from James and Antony here: