The Value of a College Education
Published on - January 10th, 2008 (Modified on - September 7th, 2010) (by J.D. Roth) 
I’ve been thinking lately about the value of a college education. I earned a B.A. in Psychology from Willamette University in 1991 (with a minor in English Lit, and almost another minor in Speech Com). What have I done with this degree? Almost nothing. Yet I do not regret the money and years I spent working to earn it.
The financial value of a college degree
Does earning a college degree make a difference to your future? Absolutely. The facts are striking. On average, those who have a college degree earn almost twice as much as those who do not. According to the U.S. Census Bureau:
Adults with advanced degrees earn four times more than those with less than a high school diploma. Workers 18 and older with a master’s, professional or doctoral degree earned an average of $82,320 in 2006, while those with less than a high school diploma earned $20,873.
Workers with a bachelor’s degree earned an average of $56,788 in 2006; those with a high school diploma earned $31,071. This flurry of numbers makes more sense when viewed in a table:
| Education | Avg. Income | Increase |
| Drop-out | $20,873 | — |
| High school | $31,071 | 48.9% |
| College | $56,788 | 82.8% |
| Advanced | $82,320 | 45.0% |
Completing college is huge. Over a life-time, a college degree is generally worth almost a million dollars. That’s money that can be used for saving, for fun, for whatever. The financial benefits of a college education are significant, and they’re very real.
Other benefits of a college degree
Obtaining a college degree isn’t just about making more money. According to Katharine Hansen at Quintessential Careers, a college education is associated with other benefits, such as:
- Longer life-spans
- Greater economic stability and security
- More prestigious employment and greater job satisfaction
- Less dependency on government assistance
- Greater participation in leisure and artistic activities
- Greater community service and leadership
- More self-confidence
A college education also gives you a broad base of knowledge on which to build. It teaches you to solve more of life’s problems. It gives you future reference points for discussing art, entertainment, politics, and history.
College offers other learning opportunities, too. Much of what I gained in college came from learning outside the classroom, from participating in clubs and other campus organizations. Many degree programs allow students to “test-drive” careers through internships and practicums.
The label on your degree does NOT matter
I asked Michael Hampton, director of career development at Western Oregon University, what advice he would offer a student who is deciding whether or not to attend college. He replied:
Unless you are going to be an engineer, architect, teacher, lawyer, the label on your degree does not matter. The degree is a check-mark (as opposed to the focus) in most job requirements. Many job ads will state: “Business, Communications or other degree required.” Most folks have the “other”.
I have a BA in Speech, Telecommunications & Film. As a television news photographer, youth director, communications director, substitute school teacher,
sports marketing manager, career programs coordinator, no one ever said to me: “You know what? We would like to hire you, but we’re not sure what that label is on your degree.”
Honestly, at the University of Oregon, I was looking for an “easy” degree because I was not a book-smart student. I was able to take mostly film & television classes to earn my BA, so I signed up. The experiences I took advantage of (internships, volunteering, and part-time jobs) in college set me up to be marketable to employers. Again, the jobs I went after required degrees, but the label on the degree was not a barrier.
Here are some more prominent examples:
- What was Alan Greenspan’s major? Econ, but he studied music first
- What was Michael Jordan’s major? Math, then Geography (dropped out to play professional basketball, later returned to earn his degree)
- What was Lisa Kudrow’s major? Biology
- What was Cindy Crawford’s major? Chemical Engineering (dropped out for modeling career)
- What was Ted Turner’s major? Classics (expelled for hanky-panky)
- What was former HP CEO Carly Fiorina’s major? Philosophy
- What was George W. Bush’s major? History
- What was Jay Leno‘s major? Philosophy
If a student is struggling to get good grades, I encourage them to look at the course catalog and choose a major based on the likability of most of the classes they would have to take, their positive experiences with the professors in the major, and the number of credits they have already taken that are compatible. They should set themselves up to be successful. Getting through the pre-reqs is a major barrier for some. Combine some “fun” classes with the challenging required courses to try and make the experience more enjoyable.
Be cool — stay in school
While a college education statistically provides a better shot at obtaining wealth, it does not guarantee success. There are English majors who end up with convenience store careers. There are high school drop-outs who go on to run multi-million dollar corporations. But obtaining a college education improves your odds.
For some young adults, college can seem like a waste of time. (Or worse, a waste of money.) Other things seem more important. I had friends who dropped out of school to pursue girlfriends across the country. I had friends who were convinced they could make more money by skipping college altogether. Student loans can be so enormous that they make a person lose sight of the fact that they’re an almost guaranteed investment in the future.
I personally had problems finding a career path — I simply had no idea what I wanted to do. When I went entered college, I wanted to be a religion major. Then I wanted to be a writer. Then I wanted to be a grade school teacher. Ultimately I earned a psychology degree, which has had little direct benefit to my life. But the education I obtained, my campus experience, and the contacts I made have been invaluable. A large part of who I am today was forged by my experiences in college. The value of a college isn’t just in the destination, but in the journey.
Resources
In preparing this article, I relied heavily on the following sources:
- U.S. Census Bureau: Educational attainment in the United States
- Free Money Finance: More education equals more pay and How I made millions off a $5,000 investment
- Quintessential Careers: What good is a college education anyway?
- Financial Calculators: What is the value of a college education?
How many of you attended college? Are you glad you did? If you didn’t get a degree, do you regret it? If you could talk to your 18-year-old self, what would you tell her? If I had a chance, I’d tell the young J.D.: “Set goals. Study more. Find a direction for life!”
Update: As usual, there are some great comments. Many have noted that education does not cause all these wonderful things — it’s simply correlated with them. (It may be that people who obtain an education would live longer even without one.) Also — and this is key — more important than education is doing what you love. Passion and drive can bring success, no matter what level of schooling you have.
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@JLP #87
Minimum Wage is a personal finance blog junkie who, at every opportunity, trashes himself or herself, has the most defeated attitude, claims that dental problems prevent him or her from getting a job, claims that a lousy resume prevents interviews, and is just your basic troll.
Never have I heard mention what his or her degree was in because telling us that it was in business,or English, or communications or whatever would mean that he or she could no longer complain due to the fact that others with the same degree would offer substantive, doable suggestions to get out of the minimum wage lifestyle.
MW won’t tell what city or state he or she lives in. There would be solutions to his or her problems at that point and MW isn’t interested in solutions only complaining.
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All I know is that the last time my resume got me an interview was about five years after I graduated.
What do you do with a social science degree? (I wanted to go to law school but couldn’t afford it.) People seem to think I should go into social work (that’s a more specific field with more specific training) or social services, like I should be a welfare case worker or work for a nonprofit dealing with some sort of “problem population” like the homeless or excons or druggies. That’s not at all what I want to do.
Employers don’t hire people my age with dead-end job histories for good jobs, especially when there are qualified applicants half my age. At this point, that’s probably my biggest obstacle.
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I would tell my 18 year old self, “You have been right all along.”
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This post is really interesting, and I have enjoyed reading through the comments.
When it comes down to it, I think the reality is that those people who are bright and motivated are going to succeed when they go for it, regardless. That is the end point.
To go further… above, people were saying that giving the extreme as an example is not showing the truth. While this is a valid point, I think that in this age, we’re seeing the extreme become more and more commonplace. As a commenter said above, these days, there is no cut an dry. Sure, if you want to be, say, a speech-language pathologist, you have to get a MA SLP and get certified, but those jobs that require a specific degree are a very small percentage of the jobs out there.
Your point about the life experience from college is a very strong one to me, but still invalid when said just for college. If someone, such as myself, chooses to work straight out of high school and learn life from a different perspective, how is that not learning life too?
In my experience, most people who go to college straight out of high school continue to live in the immature, high school mentality for another 4-6 years before snapping out of it and growing up and into themselves, whereas those who move on and do something with their lives immediately are thrown into reality – without the cushion of dorms or class schedules or in many cases, their parent’s money.
Both my fiancé and I went to work straight out of high school and we both make over $100k a year (I’m 22, he’s 30). I think the reality is that, as I bolded above, those who are sharp and motivated are those who will succeed (at college or otherwise). What’s the statistic on people who dropped out of college? And those who went to college but never did anything with their degree? I know plenty of people who have an MA in something and work as a server at a restaurant. All of my closest friends went straight from high school to work, and we all are very well off
The opportunity was there because of our natural curiosity towards activities and career fields, and our pursuit of the knowledge required to work in said career fields because of our interest.
The advice you give to “do what you will enjoy, regardless of the degree” can be employed equally to the workforce. Do something you enjoy and do well, and you will be promoted and get raises and move forward with your dreams all the same.
IMHO
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[...] out what others are saying: Get Rich Slowly: The Value of a College Education. The Simple Dollar: Ten Simple Things Any College Student Can Do To Prepare For Success In Life. [...]
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I’m one of the funny ones, I did it all the hardway and tell people not to do what I did. I got my GED insted of doing my finals in 10th grade, puttered around community college a bit but never got a degree. Insted I had to fight long and hard to prove myself. I managed to get there after many extra years and I’m now on par with my peirs who did the education system… and take a class now and then at the local college.
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I learned a ton in college and went through so much personal growth. I am a teacher with two masters degrees and will retire making less than the average for people with bachelors degrees, but I have a stable job that I love.
If you’re looking to try a new career, inner-city and rural districts always need teachers, and everywhere needs nurses. You can get trained for either without an additional 4 years of college.
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I graduated from a private liberal arts college over 7 years ago with a degree in History and English Literature. I received a very nice education and did quite well academically. However, my job is not related to my areas of study and my pay is mediocre.(My student loans are paid off though and my finances are in nice shape regardless). I absolutely do not regret attending college. A college degree will open up more doors than not having one.
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I think that guy is giving minimum wage a hard time. You know, I admire people who even go to College. Its almost like having a full time job. You can’t GET EXPERIENCE WITHOUT SOMEONE GIVING YOU A CHANCE. Employers expect a College Education and tons of experience. WHO GETS TONS OF EXPERIENCE WHEN THEIR BUSY IN SCHOOL? Most of your time and energy is spent in the classroom. What do employers expect? You to have no social life, Work full time, lose sleep,lose energy, plus go to school full time? Well I’m sorry, nobodys going to kill themselves for a job. That will cause major damage to your sanity. Bottom line, if they will just give College graduates a chance to prove themselves maybe they can get their foot in the door.
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[...] income in absolute terms if they earn a college degree, reinforcing the conventional wisdom that higher education provides a means for opportunity.” You are four times more likely to move from poverty to wealth if you earn a college degree [...]
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Major: English Lit
Current career: IT consulting
Backstory: Apple IIe geek in high school. In college, started as computer science/pre-med. Got bored with comp sci (this was in the pre-Windows era) but made a challenge to myself. Hated English/literature classes in elementary school and graduated with a lit degree. Growing up helps you appreciate the good things in life.
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Heh, came across this one late, but I wanted to add my $0.02. First went to college (local CC) as a Communications major, did not do much other than see-saw on classes and play in my band at nights (which is what I *really* wanted to be doing that that point in my life anyway).
I discovered the Internet and companies that made equipment for it in 1991 so I dropped out of school completely to work in that sphere. Went back to school for a bit in 1997 to build up my math deficiencies since I was working in an engineering department, but didn’t go much more than that. In 2002, was dealt my first of three layoffs, when I found out that not having a degree in a down market made for a rough job search. Decided to bite the bullet and go back to school full time and finish my Bachelors Degree in 2003. I chose Information Technology sing it was my active career and had been for twelve years. I Finally finished my bachelors degree in 2005, almost 20 years after I started it. What would I tell my former self? Go back and do it right the first time… which is what I drill into my kids heads just about every day (LOL!).
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Ted Turner actually majored in economics.
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Of course a BA in psychology is worthless, didn’t you know that? Everybody knows that the only degrees worth getting are in Engineering, Economics, and Life Sciences (if you plan to be an MD).
Have you EVER seen a job wanted add that said:
requirements: BA in psychology.
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So what we are saying is the type of degree you get is important to your future earning potential?
I’ve recently (04/2008) received my BA in Business Administration from a small private college. Now I’m contemplating my next education move. Do I go for an MBA from a respected state university and take the GMAT along with apply to a new school, keeping in mind both have the possibility of rejection? Or do I stick with my small private school and enter their Masters in Business Leadership program in which I’m already accepted and no GMAT?
Keeping in mind that I obtained my BA as a working adult and would continue to do the same for either masters degree option (MBA would take about 3 years while the MBL would take 18 months, MBL cheaper by about $10,000).
What are everyone’s thoughts?
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I graduated with a BS in Bioinformatics this past June. What am I doing? The same computer programming job I’ve had for two years (technically second programming job, I left my first one for more money). There was no barrier to entry, just skills I needed to know which I was able to learn on websites in a few days (equivalent of about 3 semesters of in college I had to take anyway). I went through with college in my last two years while working only because my parents asked me to and were willing to pay for it. Frankly, I feel they wasted their money and my time, but I love them anyway.
It’s never about the school/title/degree. It’s about what you know, and how to find out what you don’t know.
College is only worth it if you have a reason to go there – to learn something you wouldn’t otherwise learn elsewhere.
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Great article. I passed up going to college right out of high school, because I wasn’t sure what I wanted to do, and because I was really afraid of the debt I was about to incur. I felt like a loser for a while about not going, but everything happens for a reason and now I am attending a Major University pretty much for free. I feel that the time “off” after high school envisioned me, and now I have been lucky enough to get free tuition, so it has all worked out because the time is right to go. People incur so much debt, but you can go for free just like I am, so I say give that a shot before taking out student loans.
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I definitely regret the student loans I have. I went to community college my first two years and didn’t have to pay. My last two years cost me, though, and to be honest quality of education did not justify the jump in cost per credit hour. Many of my professors in community college taught at the university. Same quality, $50/credit hour vs $200/credit hour.
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A different outtake:
I dropped out of HS at 17, at 19 I landed a temporary job at a unionized company. I was made permanent and by the time I was 24 I was making over 85,000 a year (with OT).. I bought a house that year too. This was in the early 1990′s.
While I wouldnt recommend doing what I did to anyone else, I feel for myself Ive done pretty well for myself.
I joined my 401k plan at 20 years old putting in the max and also recieving a company match of about 85%.
Friends of mine who went on to college had to borrow money, then look for jobs at the same time they were stuck with student loans.. On top of that most of them were qualified to be “office workers” making copies for the boss.
I figure that in the 4-5 years head start I had over my peers that:
1)I accumilated a nice nest egg in my 401k with the added bonus of compounding. My head start in savings is becoming apparant now with the growth of my 401k over the years.
2)I have made “real money” since I was 21 and when my peers were entering the workforce I was already making 100k a year (with OT) and Ive had several years of earning ahead of them
3)My social security will be better
4)I have 4-5 years of seniority gained and experience in my field.
5)Back to my peers: I was earning a living while they were in school (partying) and making minimum wage while running up the student loan tab
6)They have the handicap of the student loan to payback while I do not. Thus I am better off financially.
7) Since I was able to by a home at a young age I will own it outright at a relatively young age.
8)I bought in before the housing market went crazy so I paid a lot less for a house then my peers who bought years later. Of course this is luck and right timing but I saved a few HUNDRED THOUSAND dollars on a home- imagine I had went to college, graduated, saved for a home (while paying student loans) while the housing market took off like a rocket ship– Id have double to triple the monthly payment I have now!
Like I said this is my personal story and I dont recommend doing what I did to anyone. But I figure by starting out with a good paying job at a very young age I will wind up doing better then most of my peers at the end of my working life.
BTW ,in a touch of irony I got my GED a few years back and my employeer paid my tuition to enable me to get a degree! This degree has no bearing on my current salary since I am a bargained for employee but it is ironic since I got it for the grand cost of zero dollars!
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The reality is that many people with college degrees just getting into the workforce start out with low pay. The worst thing to do is get angry, feel cheated, complain about how “unfair” it is in the workplace (the bubblegum chewing receptionist with three inch nails who makes more than you, blah, blah, blah). Best tactic is to get over the anger, forget job hopping as well because it’s the SAME wherever you go – favoritism, nepotism, gossip, politics, people you like, people you don’t like etc. Same story, different characters. Be thoughtful, patient and diligent. After all your degree only takes up ONE line on your Resume. Think about that. The rest of the blank page must be filled in with solid, successful work experience and this takes time.
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This piece is a bunch of BS. Most college graduates do well for many reasons beyond their college education (higher scholastic aptitude and they come from wealthier families). This premise that if I get any degree is a major fallacy and not supported by any data.
And so now we have too many kids going to college, and too many of these studying things like Philosophy and History (which I happen to love) instead of subjects that will make them more competitive in the job market and the US more competitive in the world econoomy.
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John,
It is possible that if you had studied history or philosophy you would have made a cogent argument that would have convinced me of the soundness of your view. The ability to entertain and refute opposing viewpoints is a valuable skill in almost any job market.
I agree that many people go to college for the wrong reasons, but that is not a basis for discounting the entire experience. A degree alone will not help, but evidence does suggest that degree holders earn more on average than non-degree holders.
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I’m going to go ahead and throw out “the man” as a source for education. I traded 4 years (7, actually) of my life for a free ride to a BS in Finance. Yes, I had to join the Navy (Oh, no! A GUARANTEED job after gruaduating??) that actually pays pretty well (don’t let the whiners fool you, taxpayer).
I am out now.. My degree really doesn’t mean squat, which is frustrating, but I intend to get my MBA now, which (you got it) is going to be supplemented by “the man”. If my math works out I’ll have a bachelor’s and an MBA for around 5K. I don’t care how you slice it, I think that will be a good ROI.
You always have to look at the expense side of the column folks!
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Hexodus
There is no evidence that shows that high school grads with the same IQ, and good grades in high school make more getting a Philosophy degre than starting out as a plumber or a Cisco network specialist.
What the data does show is that on average college grads make about $1million more over their lifetimes than non ccollege-grads. But this shows a correlation and has not been shown to be cause and effect.
There are many reasons that college grads earn more than non grads including that they tend to come from wealthier familes, on average have higher IQs, and are better readers. But the question is do two similiarly situated high school grads have a different earning potential going on to study History or Philosophy or doing something more rooted in reality. I don’t have this data but you are going to have a hard time convincing me that the Philosophy student is going to make more money than the plumber.
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I have met plenty of college grads who cant: do their own taxes, manage their 401ks/investments, change their own light bulb, make decisions, figure out simple math without a calculator..
The degree sometimes means you can sit thru college and pay (or get a 3rd party to pay the tuition) and do the tasks asked of you..
And i dont mean to insult anyone who has gone to college, it just has been my observation that the “smart ones” arent so smart after all.. Just look at the entire financial sector and the scams and meltdown.. These are supposed to be some of the smartest people in the world and they managed to ruin the worlds economy
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I’ve never met anyone who couldn’t change a lightbulb.
College doesn’t teach life skills, nor is that its job. College is supposed to teach job knowledge with maybe a little bit of training. (More training and less knowledge would be nice.)
But all of the number-crunching neglects that there are things you learn in college that don’t have price tags. My college experience was incredible — I changed and grew and stretched in ways I didn’t know possible, and in situations and experiences that would not have been possible had I not gone to college.
Am I using my degree? Yeah, but I’m a teacher, so my degree is certainly not ever going to get me a lucrative job.
While it would be difficult to overstate the importance of managing money, there is more to life than dollars.
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This is a great post and is encouraging for me. I too, have struggled over picking my major, and ultimately decided on the one that would get me my degree the fastest. I’m glad I made that decision, and this post proves that the major is not what’s important- its the degree itself. Thanks a lot!
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The change the lightbulb comment was more metaphoric.. Ive seem some educated people flub simple tasks, or could not actually grasp an idea.. In my experience Ive seen the highly educated unable to comprehend or perform such a simple task, while an uneducated servant or immigrant laborer can grasp and understand the task at hand.. The light bulb -yes most people can change one, but my point is having the degree on the wall doesnt always mean you have the smarts that are supposed to go with it
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I totaly disagree with this article. I have a bachelor of science in chemistry and a masters in physics and I cannot get a job. I live in Florida and attempted to get a substitute teaching job and determined that the salary is about 28,000 per year. The door man in my condo building has a high school diploma and is making 39,000 per year plus tips. I have been looking for work nationwide and I get often told that they are looking for someone wiht experience. I an now working on my PhD and when I graduate, the story will remain the same. no experience. If I become a teacher, the salary goes up only by $2,000 for a phD. I need to know what the value in education is? I also know people that are earning 78,000 per year with just a high school diploma. I could never earn that much with my Masters and my future PhD. I am dissapointed that I wasted my life getting educated, having no family for nothing.
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Your case is but a single data point. You can’t legitimately disagree based upon your experience and a couple of friends. Mileage varies, and the reasons for your failure could be completely unrelated to your education.
Please reconsider your position.
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Dear author,
The value of education is complementary to who you know. I am sure you heard of the saying “it is who you know not what you know”. My perspective is that if you do not know someone on the inside of a great company to help you get a good paying job, you can have all the education in the world and it will not help you. The people I encountered in my former jobs were not educated past high school but yet were related to managers and employers and thus got paid more than highly educated individuals. We see that in society all the time. My point is that education is over rated. My case is NOT a single data point, I know a lot of MS and PhD degree holders that are jobless in this economy. Companies would rather eliminate high paying jobs rather than low paying jobs in order to achieve a healthier bottom line. Education is good to have but is not the sole contributor to success. I got my education because I enjoyed the knowledge I received. I recommend that prospective students seek higher education for the knowledge that is achieved through the process but it is not a get rich scheme. The field that a student goes into also contributes to financial success. I recommend that a student thinking about going to college should not worry about the money but rather concentrate on his or her interests. I strongly recommend joining the service (army, Navy, air force). It is a great place to get educated and build contacts that will assist candidates achieve their goals and get great careers.
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Jay-Z, Kanye West, and plenty of other famous, rich business men never went to college.
“I got my degree, now I work as a secretary for G-Unit!”
G-Unit was started by a man without a degree.
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Hi, actually obtaining a college degree in Organizational Management has been a good thing but a long road. I beliee that a college degree is for all of the hard work one will put into getting a four year degree, but in the end, they may not be able to find a great job in this ecomony but it doesn’t hurt to have one. The salary earning should almost double or triple now with the requirements so many employers are looking for. Going to college takes time is a responsble thing to do and does open a few doors.
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This article here is a very interesting one that really gets a person thinking about their life and how they want to live it. college is important to peoples lives and important to myself as well, but some just might want to take time off before heading down that road of just studying and working. i am going to attend college when my time is right, yes i’d like to make that amount of money and yes i’d like to accomplish more in my life but only as my time comes. But anyways thank you for the article.
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[...] The value of a college education Even with the skyrocketing costs, a college education is still a good deal. Post-college educations tend to garner graduates salaries that are 60 percent higher than those of high school graduates. Over a lifetime, college graduates typically earn $1 million more than those without college educations. [...]
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