Later this summer, as millions of students around the country return to college, many will question the value of their investment. But according to a report released earlier today, both parents and students can rest assured: College is still worth it, and perhaps never more so than in a weak economic climate.
Georgetown University's Center on Education and the Workforce released the study, titled "The College Payoff." It found that earnings increase with education and that higher levels of educational attainment will almost always yield the greatest financial rewards.
Although individuals with more education tend to make more money, Anthony P. Carnevale, who is the director of the center and co-authored the report, cautions students to be especially careful when it comes to selecting their choice of major.
“While going to college and getting a degree is important, what really matters is the classes you take and what you do for a living,” said Carnevale, an economist. “Major trumps degree level and your choice of major is so important because that likely becomes the on-ramp to what you’ll eventually be doing.”
This study is the third of the Georgetown center's three consecutive papers examining the value of college. In May, "What's It Worth? The Economic Value of College Majors,"first highlighted the stark difference in earnings between college majors. And in June, "The Undereducated American" argued that an economic recovery hinged on the addition of 20 million college-educated workers to the labor force.
Considering the three studies' findings, Carnevale sees an economic and future-earnings argument for picking the right major and, generally speaking, a benefit to earning degrees.
Though a bachelor's degree holder typically makes 84 percent more than someone with only a high school diploma, the report found that college major and later occupation often matter more than just the degree itself, when it comes to earnings.
While students majoring in petroleum engineering earned paychecks averaging $120,000 a year, their counterparts who majored in counseling and psychology ranked among the lowest, at $29,000 a year.
Occupation can sometimes trump education level, the authors argued, but not enough to trump a college degree. Accountants and auditors with only a high school diploma can expect to make about $1.5 million over the course of their lives, while an individual working in the exact same job but with a graduate degree can expect to earn double -- or as much as $3 million.
The study's other main finding is that a woman generally needs more degrees than a man in order to earn the same amount of money. For example, the average woman must obtain a Ph.D in order to keep pace with the average bachelor's degree-holding man.
"The women's story is grand and dismal," concluded Carnevale. After scanning all 171 majors included in the study, he found not one major where women consistently out-earn men.
The report also found similar gaps by ethnicity and race. For instance, African Americans and Latinos earn less money than their white peers -- even those whites with less education. Further, the average African American or Latino with a master's degree doesn’t exceed the lifetime earnings of white bachelor's degree holder. Finally, the report concluded that Asian Americans with graduate degrees earn more than all other races, including whites.
Despite the difference in earnings by race and gender, Carnevale still sees the investment in college as the essential gateway to the American middle class -- allowing for greater career mobility, greater lifetime earnings power and a more promising future in general.
While the findings come at a time when increasing college costs and a weak labor market have sparked talk of a potential higher education bubble, Carnevale and many of his peers remain wholly unconvinced.
"The idea that college is less valuable or not worth it is just plain wrong," said Jamie P. Merisotis, president and chief executive officer of the Lumina Foundation. It sponsored the report.
Merisotis cited Facebook founder Mark Zuckerberg as the rare college dropout who later amasses a huge fortune. "Those success stories are incredible long shots. Its like getting hit by lightning," said Merisotis. "This report demonstrates over and over again that today's jobs and the jobs for tomorrow will require post-secondary education."
Carl Van Horn, a professor of public policy and director of the John J. Heldrich Center for Workforce Development at Rutgers University, sees the findings as particularly valuable for students looking to translate their expensive college degrees into actual jobs.
"Students can't change the dismal state of the current labor market but institutions and individuals can change the supply side of things and how they prepare themselves for life after graduation," said Van Horn. "We're living in a brutal marketplace but how you fare in that marketplace is based on how savvy you are about equipping yourself with the right skills once you get there."