With the price of college rising each year, some people have begun to wonder if getting a bachelor’s degree is worth the time and money it takes to earn one. The answer, it seems, depends on whom you ask.
Here is what everyone agrees on: college graduates enjoy both lower unemployment rates and higher earnings than college dropouts or people with only a high school degree. That’s good news, according to some experts, but others argue that now that just over a third of American adults have earned a four-year college degree – the highest level ever measured by the U.S. Census Bureau – the credential may not be enough to distinguish jobseekers anymore.
This makes sense when you look at Pew Research Center data that shows that while the education levels of 25- to 32-year-old have risen dramatically since the 1960s, median annual earnings have remained quite flat. So does this mean that an undergraduate degree means less in the workforce than it used to?
To get to the bottom of whether the value of a college degree has lessened, BOLD spoke to two experts who are intimately acquainted with the state of the American education system.
Nicole Smith is a senior economist at Georgetown University’s Center on Education and the Workforce, an independent, nonprofit research and policy institute affiliated with the Georgetown McCourt School of Public Policy that studies the link between education, career qualifications, and workforce demands.
Preston Cooper is a research analyst in education policy at the American Enterprise Institute at the Center for Education Reform, a non-partisan public policy think tank dedicated to defending human dignity, expanding human potential, and building a freer and safer world.
While both experts agree that, yes, in most instances it is valuable to pursue an undergraduate degree, both sides also saw problems with the system as it stands today and had a lot to say about the impact that a student’s chosen major and their financial history could have on final outcomes.
College Closes the Gap on the Skills-biased Technological Change
College prepares students with both hard and soft skills, according to Smith. She explained that over the last decade or so, the U.S. has experienced something called the skills-biased technological change. This represents a shift in the production technology that favors skilled labor – or labor that requires special training – over unskilled labor – which can be performed without special training – by increasing its relative productivity and, therefore, its relative demand.
“With computerization and technological changes, even in what most people think of as blue-collar industries, there is a cross-section of mechanization where for you to be successful in your job you have to come in with an understanding of how these machines operate,” Smith continued.
Even for jobs that did not previously require a college degree – she cited nursing and auto repair as two examples – as technology has evolved, students need a college education to learn how to use the technology required to perform these types of roles.
“My mother was a registered nurse 40 years ago, and back then you could become one with a nursing license that you obtained at the hospital. You trained at the hospital, got your license, and then worked at the hospital,” she said.
Today, it’s a bit of a different story. An associate’s or bachelor’s degree is required for most registered nursing jobs. According to The Future of Nursing: Leading Change, Advancing Health, a study published by the National Academy of Sciences, the scope of nursing and the educational requirements for performing the job have, in fact, changed greatly in the more than 150 years since Florence Nightingale first developed and promoted the concept of an educated workforce to care for the sick.
According to Smith, given the changes in the tasks that nurses perform, including the required use of computers, increased interaction with patients, and the paperwork required in nursing roles, modern nurses need those four years of training to perform the job.
A College Education Can Send Employers a “Signal”
While both sides agree that college graduates enjoy both lower unemployment rates and higher earnings than college dropouts or people with only a high school degree, are people with bachelor’s degrees actually using the skills they’ve acquired in school?
If you ask the New York Fed, the answer is no. A recently updated dataset shows that though employers see value in a college degree and seek out employees who have them, the actual skills many people learn in college are often not put to use once they get into the workforce.
According to Cooper, 34 percent of college graduates are underemployed, meaning they work in jobs that do not require the skills they learned in college. This figure, he says, has remained stable over the past 25 years. Furthermore, in research he conducted in 2016 for the Manhattan Institute, a think tank that conducts research focused on urban policy, education, public finance and pensions, energy and the environment, health policy, legal reform, and economics, he found that fewer than 60 percent of those who do finish with a college degree end up in a job that actually requires one.
This is not to say that their degrees are valueless, he said. However, rather than preparing students for the workforce, many degrees simply serve as a signal to employers about what kind of worker you might be.
According to Preston Cooper, 34 percent of college graduates are underemployed, meaning they work in jobs that do not require the skills they learned in college.
Cooper pointed out that while currently even the lowest earning majors usually earn more than people who’ve only graduated high school, that can be explained in part by this signaling. This trend might actually be making an undergraduate degree more valuable even when students are graduating without marketable skills.
“Some degrees don’t actually provide any marketable skills and therefore don’t add any actual value to the economy,” he said. “These degrees instead serve as a signal to an employer that you are hirable, that you are capable, that you have a certain aptitude, and a certain work ethic, even if the job you are performing has nothing to do with your education.”
According to a recent CareerBuilder study, what Cooper says is true. The study found that 38 percent of employers raised the educational requirements for their open positions over the last five years, but that nearly 40 percent had admitted that the skills required to fill these positions hadn’t necessarily evolved.
What’s Your Major Got to Do With It?
We’ve all heard the old joke about the student who studies underwater basket weaving in college. But does what you study really make a difference long-term, or is simply earning a degree enough to improve your earning power and thus your life? In short, does your major matter?
It matters a lot, according to both experts. In 2015, the Center on Education and the Workforce conducted research that found that students with undergraduate degrees in certain majors, specifically business majors and STEM majors, are among the highest earners. The lowest earners are found among those who majored in education, arts, and social work.
College graduates who majored in architecture or engineering earn an average salary of $83,000 per year, according to the study, while education majors earn $45,000 per year. So choosing your major wisely is an important element in deciding whether college is worth it.
Some of the onus of this should fall on the colleges and universities themselves, according to Smith. Advisors and career counselors need to be having financial conversations with students as they are making their decision about which major to choose, rather than behaving as if all college degrees are weighted the same.
“It is imperative that we have counseling for college students to help them decide what their career pathway should be,” she said. “Right now we are putting all of the burden of making these selections on the student when some of that should be on the institutions themselves, which should be responsible for making sure that those who are graduating wind up gainfully employed. Part of that is to ensure students understand the options they will have depending on the degree they choose.”
Will Master’s Degree Become the New Undergraduate Degree?
Research shows that wage gaps between American workers with a college or graduate degree and those with only a high school degree rose sharply during the 1980s, and, according to Economic Policy Institute (EPI) research, the gap is the widest its been since they started recording in 1973. College graduates, the EPI found, earned 56 percent on average more than high school graduates in 2015, up from 51 percent in 1999.
But if everyone gets a college degree, does it lessen the value of the credential and will an undergraduate degree be enough to stay competitive? Or will competition drive people to pursue higher and higher degrees to get ahead? Smith and Cooper disagree on this point.
Despite the increasing number of people with college degrees, Smith said, the college wage premium has held strong, and she also points out that earning potential is not always linked to higher degrees.
“There are some majors that people pursue where they will definitely need a master’s degree or higher to earn a living wage or have the salary increases that people expect to come with seniority. [On the other hand], there is evidence that a two-year certificate in engineering could earn you just as much as some associates degrees, so it really depends on your course of study.”
But Cooper worries that as more and more people get bachelor’s degrees, the degree itself will begin to lose its power.
“I’m a little bit worried that people will begin pursuing higher and higher degrees to get ahead,” he said. “If the bachelor’s degree becomes the new high school diploma, then the master’s degree will become the new bachelor’s degree, and so on. That’s not really going to be productive for anybody.”
Consider the aforementioned CareerBuilder study, which found that 33 percent of employers are now hiring workers with master’s degrees for positions that had been previously held by those with a four-year degree, and Cooper’s concern holds some weight.
What About Debt?
Debt is definitely part of the equation when considering if college is worth the cost. In a 2015 poll of 30,000 college alumni, researchers in a Gallup-Purdue University study found that the vast majority of college graduates agreed that their education was worth the cost. However, recent graduates were less enthusiastic than older graduates, and recent graduates who took out more than $50,000 in loans were the least likely to feel that their degrees were worth what they paid.
With 42 million Americans shouldering the weight of $1.3 trillion in student debt, studies show that education debt is altering lives, affecting choices ranging from when to retire to whether or not to have children. Cooper points out that there is a paradox when it comes to student loan debt, one that he blames, in part, on the federal government’s disbursement of $100-150 billion of aid to those pursuing college and graduate degrees. Cooper believes that this influx of freely available money encourages “marginal students,” or those who might not otherwise seek out higher education, to enroll in college. It also encourages employers to seek higher levels of education when they are looking for job applicants, he said.
“People aren’t just getting degrees because there’s ‘free money’ to do it…I see the availability of loans – even to graduate students – as opening up the market to equity and opportunity,” Nicole Smith said.
The problem, he says, is that often these marginal students don’t finish school, leaving them with debt and making them more vulnerable, ultimately, than they would have been without even a small amount of college. In fact, the National Center for Educational Statistics says that the number of students who graduate college within six years is just under 60 percent, meaning that 40 percent drop out without achieving a credential.
“As a result, these students are a lot less likely to pay off their loans and more likely to wind up in default,” he said. “On the other hand, the students who do end up graduating generally have a fair amount more debt, but they are usually in a better position to pay that debt off.”
College drop outs, he said, often have a harder time finding a job, and when they do find one, they earn less than those who have finished their educations. Rather than the federal government offering loans to all students, Cooper would like to see the federal government tighten its reigns on undergraduate loans by incorporating accountability measures on loans to increase the likelihood that those who borrow money for school graduate and pay them back.
Smith disagrees. She believes that federal aid puts attending college within reach for many Americans who might never have an opportunity to do so given the rising costs of tuition, for example, first-generation Americans, minorities, and low-income students.
“People aren’t just getting degrees because there’s ‘free money’ to do it,” she insisted. “…I see the availability of loans – even to graduate students – as opening up the market to equity and opportunity.”
Smith believes that the proponents of the idea that a college degree is unnecessary – people like Peter Thiel, for example – use a limited argument to back up their ideas. She says that citing examples like Bill Gates, Mark Zuckerberg and other successful entrepreneurs who didn’t finish college ignores the millions of others who struggle to find their footing in the job market without an education.
“What they fail to mention is that Bill Gates was a top performer in his class who finished a couple of years of college before he embarked on his mission to transform and change the world,” she said. “They also don’t tell you is that for every Bill Gates there are millions of regular people who just need to take care of their families. In order to do that, they need to get an education to perform the duties of their jobs and keep up.”