Is the pursuit of a college degree still the value proposition that it once was?
There is no doubt that the wage gap still exists between those with a bachelor’s degree and those with a high school diploma. In fact, according to a Federal Reserve Bank of New York study on The Labor Market for Recent College Grads, the median wage gap for full-time workers has only widened during the pandemic- a difference of $15,899 in 2019 compared to $22,000 now. The gap has been steadily rising over time, with the difference being just over $13,000 in 1990.
Despite the wage advantage of a college degree, many can’t afford the rising cost of tuition without taking out exorbitant loans and determine that college just isn’t worth the cost. It’s easy to understand why the cost of higher education seems to have a greater impact on a family budget. Consider that in the thirty-year span between 1990 and 2020 (see chart below), median family income rose an inflation-adjusted 23% (from $68,098 to $84,008). During the same thirty-year span. the average cost of tuition at private four-year colleges rose 96% (from $19,360 to $38,070) and at public four-year colleges tuition rose a whopping 158% (from $4,160 to $10,740).
SOURCE: College Board, Annual Survey of Colleges; NCES, IPEDS Fall Enrollment data.
Is the cost worth it? Research from Chicago Booth found that post-college graduate income may reflect preexisting differences in the earnings potential of incoming students, rather than the value added by the school itself. The research found that schools that spend more on instruction, with an emphasis on STEM (Science, Technology, Engineering and Math) majors and graduation rates had a greater positive impact for students.
While many factors ultimately determine the value of a college degree, achieving graduation will bolster the chances of landing a good job, especially for those who major in the generally higher paying STEM fields. Here’s the report from the Chicago Booth Review on the research. Enjoy the read!
Click here- Is That College Worth the Price Tag?
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