Is College Worth It? Depends on What 'Worth It' Really Means

It's graduation time for a lot of college students around the country. As they make their way across the stage to collect their diplomas—many of them saddled with tens of thousands of dollars in student loan debt and little or no job prospects—a dark question looms: Was it actually worth it?

It's a hard question to answer. According to a report in The Wall Street Journal, pricey bachelor's degrees aren't paying off immediately for many students (especially those with Liberal Arts degrees) because they aren't able to find jobs that actually require those degrees:

Those who have found employment aren't necessarily putting their degrees to use. In 2012, 44% college graduates aged 22 to 27 were working in jobs that didn't require a bachelor's degree, the highest level in nearly two decades, according to the latest data from a Federal Reserve Bank of New York study released this year.

The elevated underemployment—skilled workers doing jobs that don't require their education level—has been blamed on the economy's slow recovery. And for recent graduates, the headwinds are growing. Jobs in which a bachelor's isn't needed tend to pay less and offer fewer hours than a generation ago. More graduates also are taking out heftier loans; their average debt size has more than doubled to $33,000 in the past two decades.

Is College Worth It? Depends on What 'Worth It' Really Means

Over at The New York Times, David Leonhardt is sold on the idea that yes, college is worth it, based on new income statistics that point to higher earnings for those with bachelor's degrees versus those without. In fact, it's not even close, according to him:

The pay gap between college graduates and everyone else reached a record high last year, according to the new data, which is based on an analysis of Labor Department statistics by the Economic Policy Institute in Washington. Americans with four-year college degrees made 98 percent more an hour on average in 2013 than people without a degree. That's up from 89 percent five years earlier, 85 percent a decade earlier and 64 percent in the early 1980s.

So, while you may not put that degree to use straight out of the gate, once you do your earning potential is going to far exceed that of someone who doesn't have a bachelor's. But it's not going to be easy getting there, according to the Wall Street Journal:

The result for the class of 2014 is a widening gap between those that struggle out of the gate and those that succeed. A generation ago, a university degree was a VIP ticket to the middle or upper-middle class. Today, it is more like general admission—an entry into the venue but no guarantee of a good seat.

And even though the Journal concedes college graduates do earn more over a course of a lifetime—roughly $1 million more than a high-school graduate—those numbers don't show all the variables associated with the the typical graduate's experience. "[Obscured] in those widely quoted figures are the cost of college and the wide range of earnings. Mistakes can ripple through careers and personal finances for years."

However, Leonhardt points out that while stories about students racked with debt and struggling to find work might make for good headlines, the numbers don't necessarily support the narrative :

The anecdotes may be real, yet the conventional wisdom often exaggerates the problem. Among four-year college graduates who took out loans, average debt is about $25,000, a sum that is a tiny fraction of the economic benefits of college. (My own student debt, as it happens, was almost identical to this figure, in inflation-adjusted terms.) And the unemployment rate in April for people between 25 and 34 years old with a bachelor's degree was a mere 3 percent.

But as The Atlantic notes, it's a different story for black students, according to the Center for Economic and Policy Research:

In 2013, the most recent period for which unemployment data are available by both race and educational attainment, 12.4 percent of black college graduates between the ages of 22 and 27 were unemployed. For all college graduates in the same age range, the unemployment rate stood at just 5.6 percent. The figures point to an ugly truth: Black college graduates are more than twice as likely to be unemployed.

[...]

In fact, the center's study found that even black students who majored in high-demand fields such as engineering fare only slightly better than those who spent their college years earning liberal arts degrees. Between 2010 and 2012, 10 percent of black college graduates with engineering degrees and 11 percent of those with math and computer-related degrees were unemployed, compared with 6 percent of all engineering graduates and 7 percent of all those who focused their studies on math and computers.

Matthew Yglesias at Vox isn't quite convinced of Leonhardt's analysis either:

I don't see how this kind of data can possibly support the wide-ranging conclusions Leonhardt draws about whether or not college is "worth it." After all, this isn't the outcome of a randomized trial.

Suppose I got someone to make a chart showing the incomes of prime-age BMW drivers versus average Americans. It would reveal a large BMW earnings premium. I could even produce a chart showing that the children of BMW drivers grow up to earn more than the average American. But that wouldn't be evidence that BMWs cause high wages, and that the BMW Earnings Premiums extends across multiple generations. It would be evidence that high-income people buy expensive cars and that there's intergenerational transmission of socioeconomic status[....]

It's clear that the financial burden per se shouldn't scare you off college — a typical graduate earns more than enough to cover a typical tuition bill — but we really know much less than we should about who learns in college and what they learn and how this impacts their labor market fate.

There is no shortage of successful people who will bluntly tell you that it's simply not worth it, especially when it comes to certain careers. Here's how former Jezebel Editor Anna Holmes described her college degree in an interview with Cosmopolitan last year:

I studied journalism at NYU, which was a fucking waste of money. The school is incredibly expensive, it took 16 years to pay off my student loans, and I don't recall that I learned that much about journalism. I'm not convinced that the six-figure sum I graduated owing was worth it.

Eva Chen, the editor of Lucky magazine, also has some thoughts on how to maximize college, for those planning to pursue a career like hers:

"You do not need to go to journalism school if you want to work in the fashion industry. I think high schools condition you to think this way: If you want to be a fashion editor, go to fashion school. If you want to be a writer, you should study journalism."

"I think that the best school in life is experience. I think that practice makes perfect and I can say that even now, as someone who has been writing and editing professionally for about a decade. It has taken me 10 years to solidly define my voice and solidly feel secure in what I am doing, and that is a testament to practice."

Sounds like solid advice (especially when it comes to journalism), but I'll bet no one wants to hear their doctor say "well, I blew off college to get 'real world' experience. I learned lots of stuff practicing on the job!" Of course there are specialized fields that require intense education that there's no getting around.

Back to the original question—is that costly college education actually worth it? A big part of answering that question depends on knowing why you're actually going to college in the first place. If you're looking for the biggest bang for your buck, then it will probably be worth your while to spend a lot of time diving into those reports to figure out how you can best achieve you're biggest earning potential.

Sadly, I know too many young people who are slogging their way through a bachelor's degree in areas they don't necessarily care about because they think they have to get one. My sincere, totally-not-rooted in any scientific analysis or economic study opinion is this: The true value of a degree is measured by what it's actually worth to you. If you want to spend four or eight or twelve years of your life educating yourself because you're passionate about a specific subject or interest, then that's what you should do. If you're getting a four-year-degree in Psychic Pottery because you love it and you don't care if you have to spend the next 40 years living in your dad's van while you pay off loans, then go for it. Just do you.

But you absolutely better be aware of the very real financial burden you're going to be faced with when you graduate (unless you're some wealthy shipping heiress and can just write a check for the whole thing, no problem). If you're racking up 100K in loans studying Psychic Pottery because you think having that on a diploma will help you land some six-figure salary a month after you graduate, you're in for a rude awakening.

People shouldn't be discouraged from getting an education. They should be encouraged to study things that they love and are excited about being part of. I don't necessarily put my degree to use each and every day I work. Could I have gotten where I am today without that piece of paper that's sitting in a box somewhere in my storage closet? Maybe.

For my mother, who came to this country more almost 50 years ago barely speaking a word of English and worked her fingers to the bone raising a child on her own, telling everyone back home that her daughter is a college graduate is a huge deal. I can't put a price on the look on her face when she held my diploma in her hands for the first time. Is that more meaningless anecdotal nonsense? Probably. But it's what keeps me smiling every time I have to send the Department of Education another check.

Image by Sam Woolley.