The College Degree is Not Dead

Here's a piece from the Wall Street Journal which talks about the declining value of a college degree. But if you read deeper into the article, it notes that there's still a huge advantage to having a college degree. To note:

To be sure, the average American with a college diploma still earns about 75% more than a worker with a high-school diploma and is less likely to be unemployed.

I think they're trying to create a story where none exists.

Ok, maybe a small one exists -- maybe a college degree isn't worth as much as it once was. Maybe and maybe not. Anyway, here's my take on the whole issue of the value of a college degree:

1. Any loss in value of a college degree is likely due to the fact that more and more people are getting degrees than ever before. As such, the supply of college-educated workers has grown while demand has likely seen less growth. And when that happens, prices (in this case salaries) decline. Of course this varies by degree/job type, so selecting your salary is significantly impacted by the selection of your major/occupation.

2. A college degree is still worth the investment. Earning 75% more than a non-degreed worker is a big deal -- and can mean a boatload more money over the course of a working career. For specifics on the payoff, see College Degree Worth an Extra $23,000 per Year and College is Expensive, but Well Worth It Financially (Or: Give Four Years and $40,000 and Get an Extra $1 Million).

3. To be prudent financially, you need to match the cost/debt of college versus the expected payout. In other words, borrowing $100,000 for a job that pays $18,000 a year probably isn't a great financial move. Then again, borrowing $100,000 for a career that pays $500,000 a year probably is. Of course you need to take into account what you'll like doing, but even so, the first numbers likely will doom you to financial hardship even if you love what you're doing. Translation: you better REALLY love it, because it will make much of the rest of your life difficult.

4. No matter what degree you get, you need to actively manage your career once you graduate in order to get the most possible return from the degree. For my specific thoughts on this issue, see This Year's Graduate's Destined to Earn Millions in Their Lifetimes; Average Graduate Can Earn $25 Million if Career is Managed Correctly, Maximizing Your Greatest Asset: Why Your Career is So Important, and Your Most Valuable Asset.

Comments

[cherryblossom]

A subject very near and dear to my heart. As someone who just graduated and is struggling to find a job I really enjoyed reading the wsj article. I went to school after working a few years and as of now my former work experience is worth more to employers than my degree. The biggest problem I am finding has to do with skill sets. Employers want certain skills and depending on
1) where you go to school and
2) what you major in
you may or may not pick up the skills that employers are looking for.

I agree with point number #1 but also think that at the bachelors level, a college education is watered down. College felt like an extension of high school:(.

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I agree with cherryblossom, bachelor's degrees don't provide you with any really specialized education. Personally, I don't think that where you go to college really matters unless you're in certain fields--if you want to be a college professor, you better go to a top-tiered school or you're unlikely to get hired no matter how good your research is (trust me). But for most standard white collar jobs, I don't think they really care where you get your experience. I work in human resources and we just look at whether you have education and experience that qualifies you for the job, NOT whether you went to a 1st tier school.

[Emily]

I don't think the issue here is having a college degree vs. not having a college degree anymore -- it's having a Bachelor's vs. a Master's. Having a Bachelor's used to be much more prestigious, and it wasn't as common. Now, almost everyone in the professional workforce has a BA, and so many people are going on to get graduate degrees (tons of my friends are, but it's mostly because they want to put off the real world -- many of them don't even know what they want to do career-wise). Many jobs I've looked at say they prefer a Master's, whereas several years back, a Bachelor's would be adequate. The ante is being upped as higher education is more and more accessible and things are getting more competitive.

It's unfortunate because in my field, communications, almost all your experience happens in the real world. I was formally trained in undergrad and that was sufficient for what I do, because I've learned so much more through my internships and jobs. Going back to school honestly would not help me -- I'm learning a ton by working on projects, using new technologies, going to conferences, etc -- I don't need another degree for that. I feel like it used to be that people only went for graduate school when they had to, like to be a psychologist or lawyer or doctor. Now tons of people are going to grad school just because they want that extra degree or because they want more time to figure out what they want to do -- or as I mentioned, they just don't want to enter the 8-to-5 life. Or maybe they just want a competitive edge in the workforce. I just see an abundance of people going to grad school without a real reason, and it's frustrating because if I wanted to keep up, I'd need to spend tons of money that would indebt me for years on something I don't think will be of much value to me.

I'll only go back if it starts becoming apparent that all the people I'm competing with for jobs have graduate degrees and are edging me out, though I don't think that will happen in journalism/media area as much as other areas.

[aaktx]

It does not matter what school you go to if you are going to be a doctor. Get phenomenal grades and test scores so you can get into a medical school. Getting degrees in ancient languages, philosophy, art, and music ensure financial hardship and training as a barista.

[Bad_Brad]

All that a college degree really shows an employer any more is that you meet a certain bar in terms of competence and ambition. The employer is going to teach you what they want you to know to do your job. A college student today may think he/she is there to acquire valuable knowledge, but in reality, he/she is acquiring nothing more than an economic signal to future prospective employers. A rubber stamp. Don't get me wrong - there is intrinsic value in understanding a lot of the concepts taught at universities these days. There's just not a lot of relevance in most cases to anything in the real world.