A new report from College Board details the personal, financial, and lifetime benefits for students who obtain a higher education degree. Education Pays 2010: The Benefits of Higher Education for Individuals and Society also looks at the benefits to the community and shows how college graduates are less likely to rely on social support programs and more likely to be active citizens and lead healthy lifestyles.
The release of the report is timely considering the recent headlines that have questioned the value of a college degree. For example, check out stories in the Washington Post, USA Today, and Time magazine. Recognizing this public sentiment, the introduction of the report reads, “Journalists tell compelling stories of students who borrow large sums of money only to find that they are ill-equipped to complete their studies, or who graduate from college and are unable to find appropriate employment. It is no surprise that these stories exist; they are real and they are painful. But frequently, these stories are used to convey the notion that the costs of a postsecondary degree outweigh the benefits, and for most people this simply is not true.”
As the graph to the right illustrates, the median earnings of bachelor degree recipients was $55,700 in 2008, compared to $42,000 for associate degree recipients, $33,800 for high school graduates, and $24,300 for high school dropouts.
The report also finds that individuals with higher levels of education are more likely to have earnings and to work full time and year round. For example, 80 percent of college graduates ages twenty-five and older had earnings in 2008 and 60 percent were full-time, year-round workers. Among high school graduates in the same age range, only 63 percent had earnings and 44 percent worked full time and year round.
Even though a number of students who enroll in college never earn a degree, the report shows that they are still better off than had they never enrolled at all. In 2008, individuals with some college education but no degree still earned 17 percent more than high school graduates did. The report authors are clear that while the median return to each additional year of postsecondary schooling is significant, the payoff for earning a college credential is the highest.
Compared to a decade ago, the financial returns linked to higher levels of educational attainment have steadily increased among men and women. In 1998, the median earnings for women ages twenty-five to thirty-four with a bachelor’s degree or higher was 60 percent higher than the median earnings for women with a high school diploma; in 2008, it was 79 percent higher. For males, the difference in earnings was 54 percent in 1998 and 74 percent ten years later.
The report also looks at the price of higher education relative to earnings premium and finds that over the long run, bachelor degree recipients are much better off financially than are their counterparts without a degree. Compared to a high school graduate, the typical four-year college graduate who enrolled at age eighteen has earned enough by age thirty-three to compensate for being out of the labor force for the four years and for borrowing the full amount required to pay tuition and fees without any grant assistance.
“If it wasn’t clear before, it should be abundantly clear now that a college graduate is far more competitive in today’s workplace,” said College Board President Gaston Caperton. “What’s most disturbing is that noncollege graduates are losing ground on salary and employment, a trend that validates the soundness of an investment in a college education.”
Education Pays 2010 finds that although there were fewer people employed at all levels of education at the beginning of 2009 than there were at the beginning 2008, there was a recovery by early 2010 for four-year college graduates only. In the first quarter of 2010, 82 percent of male and 73 percent of female, four-year college graduates were in the labor force compared with 72 percent of male and 53 percent of female high school graduates.
The report authors also explain the direct and indirect benefits to society when citizens have access to postsecondary education. For example, in 2008, 8 percent of high school graduates ages twenty-five and older lived in households that relied on the Food Stamp Program, compared to just over 1 percent of students with at least a bachelor’s degree. This trend was very similar for the National School Lunch Program. In terms of average lifetime savings in taxpayer spending on social support programs associated with U.S.-born individuals earning a college degree instead of just a high school degree, they range from $32,600 for white women to $108,700 for black males.
“Education pays out more than dollars,” said Sandy Baum, an independent policy analyst for College Board and coauthor of the report. “If you have a college degree, you are more likely to exercise, volunteer, vote, and read to your kids, and less likely to be obese or smoke. According to the data, people’s level of education profoundly affects both the financial and non-financial aspects of their lives.”
To read the full report, visit http://trends.collegeboard.org/files/Education_Pays_2010.pdf.