Although the average return to obtaining a college degree is clearly positive, it is not universally so depending on institution attended, field of study, whether a student graduates, and post-graduation occupation.
“For the past few decades, it has been widely argued that a college degree is a prerequisite to entering the middle class in the United States. Study after study reminds us that higher education is one of the best investments we can make, and President Obama has called it ‘an economic imperative.’ We all know that, on average, college graduates make significantly more money over their lifetimes than those with only a high school education. What gets less attention is the fact that not all college degrees or college graduates are equal. There is enormous variation in the so-called return to education depending on factors such as institution attended, field of study, whether a student graduates, and post-graduation occupation. While the average return to obtaining a college degree is clearly positive, we emphasize that it is not universally so. For certain schools, majors, occupations, and individuals, college may not be a smart investment. By telling all young people that they should go to college no matter what, we are actually doing some of them a disservice” (p.1). (Abstractor: Author)

Major Findings & Recommendations

The authors drew the following lessons: • Rate of return on education: “The best studies suggest that the return to an additional year of school is around 10 percent. If we apply this 10 percent rate to the median earnings of about $30,000 for a 25- to 34-year-old high school graduate working full time in 2010, this implies that a year of college increases earnings by $3,000, and four years increases them by $12,000” (p.1). • Variation by school selectivity: “People who attended the most selective private schools have a lifetime earnings premium of over $620,000 (in 2012 dollars). For those who attended a minimally selective or open admission private school, the premium is only a third of that” (p.3). • Variation by field of study and career: “Even within a school, the choices a student makes about his or her field of study and later career can have a large impact on what he or she gets out of her degree. It is no coincidence that the three schools with the highest 30-year ROIs on the 2012 PayScale list—Harvey Mudd, Caltech, and MIT—specialize in the STEM fields: science, technology, engineering, and math” (p.4). • Variation in graduation results: “Comparisons of the return to college by highest degree attained include only people who actually complete college. Students who fail to obtain a degree incur some or all of the costs of a bachelor’s degree without the ultimate payoff. This has major implications for inequalities of income and wealth, as the students least likely to graduate—lower-income students—are also the most likely to take on debt to finance their education” (p.5). “All of this suggests that it is a mistake to unilaterally tell young Americans that going to college—any college—is the best decision they can make. If they choose wisely and attend a school with generous financial aid and high expected earnings, and if they don’t just enroll but graduate, they can greatly improve their lifetime prospects. The information needed to make a wise decision, however, can be difficult to find and hard to interpret” (p.6-7). (Abstractor: Author).