By Tom Holman, Director, Morning Foundation
I just finished reading the article on CNN.com where a 19 year-old entrepreneur, Dale Stephens points out that for him, “College is a waste of time.” Dale is one of the lucky recipients of a $100,000 grant given by PayPal founder Peter Thiel to 20 entrepreneurs under 20 years old to fund their projects, with the catch that they cannot be enrolled in college.
Mr. Thiel’s grants have made headlines and have caused a number of opinion columnists to question the value of attaining a college degree in this day and age. The basic argument I’ve seen reiterated goes something like this: College is expensive, so you’re better off just getting a job straight out of high school, not incurring any student loans, and starting to save for your retirement right away.
There is some validity to this argument, as colleges have gotten more expensive, and not all college graduates find high paying jobs. But if you are considering skipping college and going straight into the workforce, I encourage you to think clearly about the ramifications of your decision. In determining the value of a college degree, I suggest you research the costs and assess the value to you and not base your decision on the opinion of a columnist.
Regarding costs, there are several things to consider. At the high end, many private colleges publish a total cost of attendance of over $50,000 per year. But keep in mind, around $15,000 of this amount is for room and board. If you are on your own, working or attending college, you have to pay for your room in board anyway, so let’s focus on tuition. The College Board reports that while the published rates for private college tuition and fees are in the range of $35,000, nearly half of all full-time undergraduate students attend a four-year college with published charges of less than $9,000 per year in tuition and fees. And most students do not pay the published rate. On average, public four-year colleges charge $7,605 per year for in-state students, and the average charge for 2-year colleges is $2,713. For lower income students, the costs are typically even less, and there are many options for financing the cost of college. Federal Pell grants are available up to $5,550 per year, and many states provide additional grants of $1,500-$2,500 per year.
Now, let’s look at the value of a college degree or certificate. We’ll consider the impact on getting a job as well as getting a job you actually enjoy. A key consideration is that without a post-secondary degree or certificate your chances of getting a job are greatly reduced. In today’s economy, getting a job is pretty tough, and it is a lot tougher for those without a post-secondary education. In the U.S., our overall unemployment rate is 9.1%. For all high school graduates without a post-secondary education, the rate is slightly higher, at 9.5%. But for college graduates, unemployment is only 4.5% (US Dept. of Labor). When you look closer at the rates for young people, the situation is really tough right now. Unemployment for ages 18-25 with only a high school diploma is currently over 50%, but the jobless rate for those under 25 with a college degree is only 8%.
I believe it is hard to argue that skipping college so you can start working is a viable financial alternative when over half of the young people out of high school are unemployed.
And what about the kind of job you can get with more education?
The US Census Bureau (and many others) show that the average pay for a job with a college degree earns almost twice the average for those with a high school diploma ($58,600 vs. $31,300). Over a lifetime of work, higher education will yield $800,000 more in wages. And pay is not the entire story. The jobs available to those with a post-secondary education are typically more interesting, there is more mobility between jobs, and there are more advancement opportunities within companies. In other words, a college degree or certificate will greatly enhance your ability to get a job you enjoy. In addition to actually liking your work and getting paid more for it, the Institute for Higher Education Policy points out a number of additional benefits including more leisure time, more opportunities for civic engagement, better health, less reliance on government services, and having children that are far more likely to be successful in school.
Of course, there will always be exceptions, such as a handful of highly successful entrepreneurs like Bill Gates and Michael Dell who were very successful without completing college, but the fact of the matter is that 97% of CEOs in America have a college degree (Spencer Stuart, 2004 CEO Study). And by the way, Michael Dell is big believer in higher education, as he has invested millions through his own foundation on programs like AVID and college scholarships.
Speaking of AVID, you might be interested in the article I wrote a couple of years ago, noting the value AVID brings to college preparation.
As you think about whether college is a waste of your time or not, I would encourage you to consider what your life will be like on each side of the fence, the side with and without a post-secondary education. Without a post-secondary education, do you believe that you will have success in finding a job you enjoy in this economy that pays you what you are capable of earning? Some will, by no doubt, but I think the odds are against it.
For me, I will continue to encourage young people to pursue the highest level of education they can to maximize their personal potential not only for their own benefit, but also for the benefit of society.
Tom Holman is the director of the Morning Foundation, a private foundation dedicated to helping address issues around children’s health, education, and social service. Tom is currently focusing efforts on helping more underserved students access college and persist to graduation.