Across the nation, young people (and many who are not so young) are headed back to school.
For those attending higher education institutions, a new semester also means a tuition bill. The cost of college has risen substantially, as have living expenses for students. There are also opportunity costs, which are the potential earnings students give up by choosing school rather than work.
Given the high and rising costs, I am often asked if a college education is still worth the investment. The answer is a resounding yes, though there should clearly be a thoughtful decision process.
Higher educational attainment leads to both greater earnings and lower unemployment. In 2017, the median weekly earnings for all workers age 25 and older was $907 (according to the U.S. Bureau of Labor Statistics). For people with a bachelor’s degree, it was $1,173, while for those with a high school diploma it was $712. The overall unemployment rate was 3.6 percent, but only 2.5 percent for those with a bachelor’s degree. (For those who don’t finish high school, median weekly earnings were only $520, and the unemployment rate was 6.5 percent.)
In Texas, the average cost to attend one of the largest public universities tops $10,000 per academic year for in-state tuition and fees alone. However, there are other universities with far lower costs. There are also options for taking some classes at a local community college and then transferring into a larger (and generally more expensive) university.
Balanced against these costs is the potential for earnings. Payscale’s 2017-2018 College Salary Report provides information about salaries by major. The highest paying degrees cluster in engineering, science, math, and technology areas. The top rank went to petroleum engineers, with early career pay of $94,600, and mid-career pay of $175,000. Clearly, the four years spent to acquire such a degree will pay off fairly quickly. Engineering obviously isn’t for everyone, however, and for other majors, beginning salaries can be substantially lower and graduates may face having to find jobs outside their chosen field of study.
The importance of higher education can hardly be overstated, yielding more job opportunities and higher pay. While education is intrinsically valuable irrespective of earning potential and the world certainly needs those who choose artistic and other socially beneficial fields where the rewards are often other than pecuniary, in the absence of unlimited financial resources, it is relevant to consider likely future earnings. If debt is involved, likely salary upon graduation is particularly crucial to avoid overly burdensome and extended payments. College choice and major should generally be undertaken as a financial decision (at least in part), balancing the potential earnings enhancement a degree offers against the cost of attendance.