While a college education can result in higher pay - for certain degrees - it is not an automatic ticket to greater income. Factor in the lost wages while attending college and the cost of the education itself, and the gap narrows considerably. That is what I take away from this graph. Others look only at the top line and report that college = money.
In this recent MSNBC piece, they make the argument that a college degree is worth a Million dollars in increased income, "on average". On average, of course, includes people with advanced degrees, such as doctors and lawyers. Your typical undergraduate degree is worth closer to a half-million, if that.
So college is a good deal for everyone, right? Hold on there, tiger. Journalists are not statisticians, nor can they even add a column of numbers.
The report fails to mention a lot of things and also skews a lot of statistics:
1. The lifetime earnings difference does not account for the four years the blue-collar worker is working, whereas the college attendee is not working. If you make $25,000 a year as an entry-level worker, this is a $100,000 overall that is not accounted for.
2. Throw in the cost of education - another $100,000 to $200,000 and the gap starts to close.
3. The "Million Dollar" figure is an average. Many folks with just undergraduate degrees may make little more as the result of a college degree. Subtract the lost wages and the cost of college, and the difference narrows.
4. Don't forget to add interest on those student loans. If the parents put that $200,000 in college expenses into an investment fund for the child at age 18, what would it be worth at retirement? If you plug the numbers into Moneychimp, the $200,000 invested in an undergraduate degree, put into a mutual fund earning 5% rate of return, will, by age 65 be worth $1,981,194.22 or nearly double the excess money earnings over a lifetime.
5. Finally, not all college degrees are alike. A degree in Engineering or Finance might be worth something. A degree in anthropology or a B.S. in Physics is basically worthless. Saying that ANY college degree will make you wealthy is just a lie. Many of the "wall street protesters" are asking that their student loans be forgiven, as they listened to LIES like this article promulgates, and then are wondering why their $100,000 investment ain't paying off.
While I was a young associate at a law firm, working until 8:00 every night, the plumbers and electricians were on the golf course every day at 3:30. And guess who made more money? Yup. The tradesmen. Even for Lawyers (particularly these days) the advantage of higher education is overstated.
My advice: DO WHAT YOU LOVE TO DO - and the money will come. Going to college to make money is a waste of time - you won't make a lot more, you'll just be miserable. And going into debt for college makes no sense at all.
I love what I do, and they pay me a bit. I consider myself lucky.
Not everyone should go to college - and going based on this "study" - which is based on two thin years of data - is a bad idea. Who funded this study, Sallie Mae?
