We’ve all heard stories about people dropping out of college to start multi-million dollar businesses. People like Mark Zuckerberg, Michael Dell and Steve Jobs who threw off the chains of higher education and got right down to making money.
These stories lead some people to conclude that a college education isn’t necessary. That all you really need to succeed is grit, grind and old-fashioned street smarts. That college is just a waste of money.
Additionally, many graduates have had difficulty finding employment in their field of study. This leads people to believe that obtaining a degree doesn’t guarantee a higher paying job.
I’d tell any teenager today the same thing: Forget about college. Instead, travel for a year. Go to several major cities. Work and intern in many different industries. Get a sense of the world. Meet people from other cultures. Learn what makes people tick. Learn history and geography.
Are these people right? Is college just for suckers who don’t know any better? Are those who don’t obtain a higher education just as likely to succeed as those who go straight into business after high school?
To answer those questions, we need to look at the data. Anecdotal stories are often misleading, and can be more inspiring than informative.
So what do the numbers actually say?
THE RISING COST OF EDUCATION
Before we can answer the question of college, we need to acknowledge that it’s costly.
There’s no disputing that the cost for college tuition is increasing. When adjusted for inflation, the average cost of tuition has more than doubled since 1986.
Additionally, attending college costs a larger percentage of household income, making it more difficult to attend without incurring significant debt.
But does that mean you shouldn’t attend? Let’s look deeper.
Adult female working on a laptop and smartphone at a wooden table. A blog post by researchers Jason Abel and Richard Deitz dug into the post-college careers of those who graduated from college between 2009 and 2013. Their findings are somewhat startling, at least on the surface.
45% of the graduates are working in a “non-college job,” meaning a job that doesn’t necessarily require a bachelor’s degree. On the surface, this seems to show that a college education isn’t necessary after all. If you’re going to end up as a barista, why spend 4 years and thousands of dollars at college?
But, as usual, there’s more to this story than meets the eye.
When you break the 45% down by job type, half are working in relatively high-paying jobs, like information processing and sales. Another 25% work in modest-paying jobs, such as office and administrative support. Only 20% of all recent graduates are working in low-skilled, low-paying service jobs. And in these categories, graduates are making more money than those with no college degree.
Additionally, those with degrees are much more likely to transition to much higher paying jobs. As Abel and Deitz say:
In addition, the composition of jobs held by recent graduates changes within the underemployed occupation categories as workers age. The percentage who are employed in the low-skilled service category drops by half, suggesting that these jobs were temporary for a good number of young graduates. By age 26 or 27, only 6.6 percent were still working in these low-paying jobs. The other two groups with the most significant declines include office and administrative support, and sales.
Underemployed graduates don’t stay underemployed for long. These jobs are usually stopping points before better paying jobs.
MORE LIFETIME EARNINGS
A recent study from Georgetown University found that, on average, college graduates earn $1 million more in earnings over their lifetime. Another recent study by the Pew Research Center found that the median yearly income gap between high school and college graduates is around $17,500.
By choosing not to go to college, you are essentially forfeiting $17,500 per year and $1 million over your lifetime.
That’s $1 million less in retirement and $17,500 less in disposable income every year. Before you don’t go to college, consider what you would do if you had an additional $1 million available when you retire. Would you buy a home? Create a fund for your children? Travel Europe?
Not attending college costs a lot. Much more more than people think.
Finally, the unemployment rate for those with college degrees is significantly less than those without. Consider these statistics from the Bureau of Labor Statistics.
The unemployment rate for those with a high school degree or less is three times higher compared to those who did attend college.
You are far less likely to be unemployed if you have a degree.
SO WHY ARE SO MANY UNDEREMPLOYED?
Of course, these statistics raise the question: why are so many recent college graduates underemployed?
There are several reasons for this. First, and most obviously, the number of workers with degrees has increased over the last forty years. Since 1965, the percentage of graduates has tripled, rising from 10% to 30%.
More graduates in the workforce means more competition, fewer available jobs, and less pay.
Second, the U.S. economy has been in the Great Recession since 2008, and recessions always lead to higher unemployment among recent graduates. As the Economic Policy Institute says:
Unemployment of young graduates is extremely high today, but not because of something unique about the Great Recession and its aftermath that has affected young people in particular. Rather, it is high because young workers always experience disproportionate increases in unemployment during periods of labor market weakness—and the Great Recession and its aftermath is the longest, most severe period of economic weakness in more than seven decades.
It’s not that there is a problem with higher education or that college degrees are somehow a waste of money. The economy as a whole has been hurt, which in turn contributes to unemployment and underemployment.
From the data, it can be tempting to conclude that trying to make it without a degree might be a valid solution, but this isn’t the case.
While it’s true that it’s currently challenging for graduates, it’s even harder for those without degrees. Paul Taylor, executive vice president of the Pew Research Center, says:
“The driver of that widening [gap between income] is not so much that today’s college graduates are doing better than yesterday’s college graduates are doing; it’s that today’s high school-only graduates are doing worse than yesterday’s high school-only graduates,” he says. “The real story is the collapse in economic opportunity for people who do not continue their education beyond high school.”
Yes, college graduates are facing more challenges than before, but it’s even more difficult for those who have never attended college. Ultimately, not going to college is a decision that sabotages you for the rest of your life. Your income and earnings will always be lower and you will always have to fight harder for a job.
It’s trendy for people to advise against college. They say things like, “If Richard Branson didn’t go to college, why should you?” And while there’s obviously a little bit of truth to this question, it misses the main point: most people aren’t Richard Branson.
If you want to be a rogue entrepreneur who relies on no one and clears his own path, then maybe college isn’t for you. But the percentage of people who shouldn’t get a degree is very low.
If you want to set yourself up to succeed, a college degree is clearly the way to go.
MORE EARNINGS WITH FINANCIAL ASSISTANCE
Many students at PGS receive financial assistance. Through financial aid, tuition reimbursements, loans and grants, scholarships and other tuition-reducing programs, we seek to set our students up for success.