Is College Worth It? ROI, Alternatives, and Career Value

Overview of the College Value Debate

Ever since the post-Second World War era, a college education has been the traditional path for those focused on professional success in the United States and elsewhere in the industrial world. As a result, there is a general expectation that pursuing a college degree is necessarily more consistent with long-term success in professional and general life. Typically, high school graduates are encouraged to continue on to college, whether or not they have any specific idea of what course of study or professional field to pursue. However, the increasing cost of a college education combined with reduced demand for labor in a less optimistic national economy may have changed the calculus of these traditional expectations.

The current estimated outstanding student loan debt in the U.S. is $1 trillion, which includes an average debt upon college graduation of approximately $25,000 per graduate. In many cases, parents who earn too much for their children to qualify for substantial government or institutional financial assistance — but not nearly enough to pay for four years of college — end up taking on the debt so their graduating children do not start their adult lives in debt. In other cases, parents may take on a mortgage on the family home to finance college tuition. When students do qualify for government-funded loans and other forms of tuition assistance, public funds end up financing the pursuit of degrees without a sufficiently high return on investment (ROI) to justify the public expense.

By considering the statistically predicted average lifetime earnings of thousands of different job types in conjunction with the cost of a college education — and comparing these against a conservative investment of the same amount of money — it is possible to conduct an empirical ROI analysis. According to some who have conducted these types of analyses, several important general patterns emerge that help distinguish students who would probably benefit more from going to college from those who would probably benefit more from pursuing another path after high school.

First, obtaining a college degree matters far more than simply attending college. If there is a marked distinction in lifetime earnings in relation to college, the greatest differential is between college graduates and non-college graduates; that differential is not evident between individuals who had some college and those who had none. Second, only roughly 60 percent of students attending American four-year colleges and 70 percent attending two-year colleges graduate within six years of first matriculation. Third, many college students receive degrees in fields with no real connection to their specific professional interests. Employment rates and lifetime earnings among recent graduates are much higher among students who pursue degrees in the context of specific career goals than among students who select their majors largely out of the necessity to graduate. After considering these patterns in conjunction with the empirical income and earnings-related evidence, only a relatively small fraction — approximately one out of twenty — of the nation's 3,000 accredited colleges represents a good ROI.

The Economic Case For and Against College

Other analysts acknowledge the empirical comparison but suggest that economic factors are only one component of the decision about going to college. According to this view, the benefits of college are hardly limited to those in the economic realm. Whether or not a student eventually receives a degree, the college experience provides other life benefits, such as stronger interpersonal relationships, communication skills, marital relationships, and parenting skills. College attendance broadens philosophical perspective and exposes the individual to other cultures, people, and circumstances in a learning environment. More college experience also corresponds to lower rates of crime within communities, more political involvement, greater general wellbeing, and greater vocational satisfaction.

When thousands of American college students were surveyed about their primary objective for pursuing a college degree, the most common response — by far — was the belief and expectation that it would lead to greater professional success and earning potential (Hay, 2013). In principle, that makes economic analysis the most relevant measure of ROI. By contrast, had the most common survey response been that the main purpose of going to college was to become culturally competent or politically involved, then relative cultural competence would have been the most relevant measure of educational value.

That is not necessarily to deny the importance of the other benefits of a college education. In theory, a college education improves one's social and cultural competence and promotes communication skills. In reality, more than one-third of American college students need remedial work in college (Ripley, 2012), and many of them will not acquire the basic writing and communication skills they should have already developed in high school (Strauss, 2013; Tyre, 2012). Likewise, anecdotally, many people remember their college experiences as some of the most rewarding of their lives and maintain friendships, associations, and interests that began in college. However, unless those are the stated reasons for pursuing a college degree at great financial expense, those benefits should not factor into the calculus of whether college is worth the cost today.

Hidden Weaknesses in Lifetime Earnings Data

In the most general statistical analysis, attending college may appear beneficial from a long-term earning perspective. As of 2012, in 2011 dollars, people without a high school diploma will earn a projected average of $1 million over a 30-year career (Ripley, 2012). High school graduates will earn $1.4 million. Having some college without earning a degree boosts lifetime earnings to $1.6 million; those with an associate's degree will earn $1.8 million; and those with a four-year bachelor's degree will earn $2.4 million. Those with a master's degree will earn $2.8 million; those with doctoral degrees, $3.5 million; and those with professional degrees, $4.2 million on average (Ripley, 2012).

These figures likely conceal important nuances in the data. For one thing, it would be appropriate to omit those at the highest end of that spectrum from the population to whom the research question pertains, simply because people who eventually achieve post-graduate degrees are much more likely to have entered college with specific educational and vocational objectives. For another, these data fail to distinguish between college students who achieve degrees in their intended career areas and those who drift through a bachelor's degree program largely by default or arbitrary choice. Furthermore, numerous academic programs may reflect genuine subject-matter interest on the part of the student while having little vocational relevance outside of teaching those subjects as a profession — Anthropology being one such example (Ripley, 2012).

Typically, today's college graduates find themselves taking on employment after graduation that does not require a college degree of any kind, such as working in coffee houses or retail sales positions (Coy, 2009). The largest growing segment of unemployed young adults consists of those with college degrees who cannot find employment directly related to their academic training or that corresponds to their productive vocational potential (Coy, 2009). Undoubtedly, pursuing a college degree was not the best option for many of them.