Trends in Higher Education Series Education Pays 2010 The Benefits of Higher Education for Individuals and Society Sandy Baum Jennifer Ma Kathleen Payea OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc EEaarrnniinnggss HHeeaalltthh BBeenneefifittss EEaarrnniinnggss HHeeaalltthh BBeenneefifittss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss OOtthheeBBrree EEnncceeoofifinnttssoommiicc OOSSttoohhcceeiirree ttIInnaaddll BBiivveeiiddnnuueefifiaalltt ss&& EEnnCCrroooolllllllleemmggeeeenn tt EEAAddttttuuaacciiaannttmmiiooeennnnaattll CCGGooeemmooppggaarraarriippsshhooiinnccss EEaarrnniinnggss HHeeaalltthh BBeenneefifittss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss Technical Notes Acknowledgments Education level: The categories describing education level always refer to the This report would not have been possible without the support and hard highest level of education attained, unless otherwise specified. For example, work of many individuals and organizations. We are particularly grateful the term high school graduate is used to describe those who graduated from to Diane Elliott, Kathleen Little, and Anne Sturtevant for their invaluable high school but have no college experience. assistance. We are also grateful to the researchers who generously gave us permission to cite and reproduce their findings. We appreciate the Not a high school graduate: Some data sources divide non-high school contributions of Annika Many, Christen Pollock, Tom Rudin, and Anne Sussman graduates into “less than ninth grade” and “ninth through twelfth grades.” at the College Board. The design and production skills of Laura Horn and the In these cases, we use a weighted average based on the relative sizes of staff at MPR Associates, together with the staff of KSA-Plus Communications the two groups to generate the data for all individuals with less than a high made the publication possible. school diploma. High school graduates include recipients of the General Educational Contact Information for the Authors Development (GED) diploma. Sandy Baum, [email protected] Some college: Education categories sometimes include “some college Jennifer Ma, [email protected] no degree” and “associate degree.” In other cases, there is one category for “some college or associate degree.” Available data prior to 1992 define Kathleen Payea, [email protected] educational attainment by years of study, making it impossible to determine which students with 14 years of education, for example, earned an associate degree and which did not. Professional degrees include MD, DDS, DVM, LLB, and JD. Doctorate-granting institutions: Universities that offer graduate Ph.D. programs, emphasize research, and generally have more selective admission requirements than most four-year colleges that do not offer doctoral programs. Flagship institutions: These institutions are typically the best-known institutions in the state, were generally the first to be established, and are frequently the largest and most selective, as well as the most research-intensive public universities. Moving averages: Moving averages are calculated as the average of the identified year and the two preceding years. An alternative methodology would average the specified year with the preceding year and the succeeding year. Rounding: All dollar figures have been rounded to the nearest $100. OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc EEaarrnniinnggss HHeeaalltthh BBeenneefifittss EEaarrnniinnggss HHeeaalltthh BBeenneefifittss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss OOtthheeBBrree EEnncceeoofifinnttssoommiicc OOSSttoohhcceeiirree ttIInnaaddll BBiivveeiiddnnuueefifiaalltt ss&& EEnnCCrroooolllllllleemmggeeeenn tt EEAAddttttuuaacciiaannttmmiiooeennnnaattll CCGGooeemmooppggaarraarriippsshhooiinnccss EEaarrnniinnggss HHeeaalltthh BBeenneefifittss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss Education Pays 2010 The Benefits of Higher Education for Individuals and Society Foreword The College Board is pleased to release the third edition of Education Pays: The Benefits of Higher Education for Individuals and Society. Like the original 2004 edition and the 2007 edition, this report documents the returns both individual students and society as a whole receive from investments in higher education. As part of our mission to connect students to college success and opportunity, the College Board provides reliable and relevant information and policy analysis to the public and to the education community. Considerable attention is currently focused on the difficulties facing state and federal governments, students, and families attempting to finance higher education in a weak economy. Colleges and universities are also facing challenges as they try to balance their budgets and help students continue their education. In this environment, we are working to help keep the critical role of higher education in the future of our economy and our society in the foreground. The pages that follow illustrate some of the economic and noneconomic gains we enjoy from our investments in higher education and the benefits we forgo when educational opportunities are too limited. Education Pays focuses on nonmonetary benefits in addition to the financial returns of higher education. The second part of the report details differences across demographic groups and changes over time in participation and success rates in postsecondary education. The report updates information included in previous editions and adds some new perspectives. Education Pays was written by Sandy Baum, independent policy analyst for the College Board and professor emerita of economics at Skidmore College, and Jennifer Ma and Kathleen Payea, independent policy analysts for the College Board. The responses we have received to earlier editions of Education Pays are gratifying, and the extensive use that researchers, policymakers and advocates for education have made of the information we provide reassures us that studies such as this one are well worthwhile. This report supplements our annual publications, Trends in Student Aid and Trends in College Pricing. All of these reports are designed to provide a foundation of evidence to strengthen both policy discussions and individual decisions. We look forward to the conversations that these analyses will evoke. Sincerely, Gaston Caperton President Trends in Higher Education Series trends.collegeboard.org 1 OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc EEaarrnniinnggss HHeeaalltthh BBeenneefifittss EEaarrnniinnggss HHeeaalltthh BBeenneefifittss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss Table of Contents and List of Figures Executive Summary .....................................................................4 Fig. 1.11 Reductions in Public Expenditures Associated with Increases in Educational Attainment .........22 Introduction ..................................................................................6 Fig. 1.12a Pension Plan Coverage by Education Level, 2008 ...................................................................23 Part 1: Individual and Societal Benefits of Higher Education ............................................10 Fig. 1.12b Participation Rates in Pension Plans by Education Level, 2008 .........................................................23 Earnings Fig. 1.13 Health Insurance Coverage by Education Level, Fig. 1.1 Median Earnings and Tax Payments by 1979–2008 .........................................................24 Education Level, 2008........................................11 Fig. 1.14 Poverty Rates by Household Type and Fig. 1.2 Lifetime Earnings by Education Level ................12 Education Level, 2008........................................25 Fig. 1.3 Cumulative Earnings by Education Level ...........13 Fig. 1.15 Public Assistance Program Participation Rates, Fig. 1.4 Median Earnings by Race/Ethnicity, Gender, by Education Level, 2008 ...................................26 and Education Level, 2008 .................................14 Health Benefits Fig. 1.5 Median, 25th Percentile, and 75th Percentile Fig. 1.16a Smoking Rates by Education Level, Earnings by Gender and Education Level, 1940–2008 .........................................................27 2008 ...................................................................15 Fig. 1.16b Smoking Histories by Education Level, 2008 ....27 Fig. 1.6 Median Earnings by Gender and Education Level, 1971–2008 ...............................................16 Fig. 1.17 Exercise Rates by Age and Education Level, 2008 ...................................................................28 Fig. 1.7a College-to-High School Weekly Wage Premium, 1963–2008 .........................................................17 Fig. 1.18a Adult Obesity Rates by Age and Education Level, 2008 .........................................................29 Fig. 1.7b Median Hourly Wage Gain per Year of Schooling ............................................................17 Fig. 1.18b Childhood Obesity Rates by Age and Highest Education Level in the Household, 2008 ...........29 Other Economic Benefits Fig. 1.19a Low-Birth-Weight Rates by Race/Ethnicity Fig. 1.8a Employment Relative to First Quarter of 2007, and Mother’s Education Level, 2006 .................30 by Education Level .............................................18 Fig. 1.19b Breast-Feeding Rates by Duration and Fig. 1.8b Labor Force Participation Rates by Gender Education Level ..................................................30 and Education Level, First Quarter 2010 ...........18 Other Individual & Societal Benefits Fig. 1.9a Job Satisfaction by Education Level, 2008 ........19 Fig. 1.20a School Readiness of Preschool Children, Fig. 1.9b Importance of Feeling Work Is Important by Parents’ Education Level, 2007 ....................31 and Gives a Sense of Accomplishment, by Education Level, 2006 ...................................19 Fig. 1.20b Parental Involvement in Activities with Their Children, by Parents’ Education Level, 2007 .....31 Fig. 1.10a Unemployment Rates by Education Level, 1992−2009 .........................................................20 Fig. 1.21 Volunteering Rates by Education Level, 2009 ...32 Fig. 1.10b Unemployment Rates by Education Level and Fig. 1.22 Voting Rates by Age and Education Level, Race/Ethnicity, 2009 ..........................................21 2008 ...................................................................33 2 Education Pays 2010 OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc EEaarrnniinnggss HHeeaalltthh BBeenneefifittss EEaarrnniinnggss HHeeaalltthh BBeenneefifittss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss Part 2: The Distribution of the Benefits: Educational Attainment Who Participates and Succeeds Fig. 2.5a Completion Rates by Family Income and in Higher Education? ....................................34 Parental Education Level ....................................40 College Enrollment Fig. 2.5b College Matching Patterns by Socioeconomic Factors ................................................................41 Fig. 2.1 Enrollment Rates by Family Income, 1984–2008 .........................................................35 Fig. 2.6a Completion Rates by Sector ..............................42 Fig. 2.2a Immediate Enrollment Rates by Race/Ethnicity, Fig. 2.6b Completion Rates by Sector and 1975–2008 .........................................................36 Race/Ethnicity ....................................................42 Fig. 2.2b Enrollment Rates of 18- to 24-Year-Olds by Fig. 2.7 Educational Attainment over Time, Race/Ethnicity, 1975–2008 ................................36 1940–2009 .........................................................43 Fig. 2.3a Enrollment Rates by Gender, 1970–2008 .........37 Fig. 2.8 Educational Attainment by Race/Ethnicity and Gender, 1973–2009 ...........................................45 Fig. 2.3b Enrollment Rates of 18- to 34-Year-Olds by Age, 1970–2008 ............................................37 Fig. 2.9a Students in STEM Fields by Gender and Race/Ethnicity ....................................................46 Fig. 2.4a Postsecondary Sector by Family Income, 2007–08 .............................................................38 Fig. 2.9b Students in STEM Fields by Citizenship Status, Parents’ Education Level, and Dependency Fig. 2.4b Family Income by Postsecondary Sector, Status..................................................................47 2007–08 .............................................................39 Geographic Comparisons Fig. 2.10 Enrollment Rates by State, 2005–06 ................48 Fig. 2.11 International Attainment Rates by Age, 2007 ....................................................................49 References .................................................................................50 Trends in Higher Education Series trends.collegeboard.org 3 OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc EEaarrnniinnggss HHeeaalltthh BBeenneefifittss EEaarrnniinnggss HHeeaalltthh BBeenneefifittss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss Executive Summary Students who attend institutions of higher The Benefits of Higher Education education obtain a wide range of personal, Individuals with higher levels of education earn more and financial, and other lifelong benefits; likewise, are more likely than others to be employed. taxpayers and society as a whole derive a multitude of direct and indirect benefits ●● Median earnings of bachelor’s degree recipients working full- when citizens have access to postsecondary time year-round in 2008 were $55,700, $21,900 more than median earnings of high school graduates. education. Accordingly, uneven rates of participation in higher education across ●● Individuals with some college but no degree earned 17% more different segments of U.S. society should than high school graduates working full-time year-round. Their be a matter of urgent concern not only to median after-tax earnings were 16% higher. the individuals directly affected, but also to ●● For young adults between the ages of 20 and 24, the unem- public policymakers at the federal, state, and ployment rate in the fourth quarter of 2009 for high school local levels. graduates was 2.6 times as high as that for college graduates. The financial return associated with additional years of This report presents detailed evidence of schooling beyond high school and the gaps in earnings by the private and public benefits of higher education level have increased over time. education. It also sheds light on the ●● In 2008, median earnings for women ages 25 to 34 with a distribution of these benefits by examining bachelor’s degree or higher were 79% higher than median both the increases and the persistent earnings for women with a high school diploma. The earnings disparities in college participation and premium for men was 74%. These earnings differentials were completion. 60% and 54%, respectively, a decade earlier. ●● The median hourly wage gain attributable to the first year This Executive Summary highlights some of of college, adjusted for race, gender, and work experience, the key ideas in the report. increased from an estimated 8% in 1973 to about 10% in 1989, and 11% in 2007. Federal, state, and local governments enjoy increased tax revenues from college graduates and spend less on income support programs for them, providing a direct financial return from investments in postsecondary education. ●● In 2008, 8% of high school graduates ages 25 and older lived in households that relied on the Food Stamp Program, compared to just over 1% of those with at least a bachelor’s degree. The pattern was similar for the National School Lunch Program. ●● Spending on social support programs and incarceration costs are much lower for college graduates than for high school gradu- ates. Estimated lifetime savings range from $32,600 for white women to $108,700 for black men. The gains in tax revenues produced by a more educated population are even greater. 4 Education Pays 2010 OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc EEaarrnniinnggss HHeeaalltthh BBeenneefifittss EEaarrnniinnggss HHeeaalltthh BBeenneefifittss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss College-educated adults are more likely than others to Participation and Success in Higher Education receive health insurance and pension benefits from their employers and be satisfied with their jobs. Although college enrollment rates continue to rise, large gaps persist across demographic groups. ●● In 2008, about 58% of college graduates and individuals with some college education or an associate degree reported being ●● The college enrollment rate of high school graduates from the very satisfied with their jobs, while 50% of high school gradu- lowest family-income quintile increased from 51% in 1998 to ates and 40% of individuals without a high school diploma 55% in 2008. The rate for middle-income students declined reported being very satisfied. from 63% to 61%, while 79% of the highest-income high school graduates enrolled in college in 1998 and 80% enrolled in 2008. Adults with higher levels of education are more active citizens than others. ●● From 1998 to 2004, the gap between the proportions of white and black high school graduates who enrolled in college within a ●● Both the percentage of people who donate their time to orga- year fluctuated between 8 and 10 percentage points. By 2008, nizations and the number of hours people spend in volunteer the gap had grown to about 14 percentage points. activities are higher among individuals with higher levels of education. ●● From 2000 to 2004, the gap between the proportions of white and Hispanic high school graduates who enrolled in college College education leads to healthier lifestyles, reducing within a year narrowed from 19 to 10 percentage points. By health care costs for individuals and for society. 2008, the gap had declined to 8 percentage points. ●● Within each age group, college-educated adults are less likely Enrollment patterns differ across income groups, and than others to be obese. In addition, children living in house- graduation rates vary by institution type. holds with more educated parents are less likely than other children to be obese. ●● About 40% of dependent undergraduate students from families with incomes below $40,000 enrolled in public two-year col- ●● During the decade from 1998 to 2008, the smoking rate declined leges in 2007-08, and 8% enrolled in for-profit institutions. In from 14% to 9% among adults with at least a bachelor’s degree, contrast, 17% of undergraduate students from families with while the rate for high school graduates declined from 29% incomes of $120,000 or higher enrolled in public two-year col- to 27%. leges, and 1% attended for-profit institutions. College-educated parents engage in more educational ●● Of first-time full-time students who began studying for a bach- activities with their children, who are better prepared for elor’s degree at a four-year institution in 2002, 57% earned school than other children. this degree within six years from the institution at which they began their studies. Completion rates averaged 65% at private ●● Among parents whose highest degree was a bachelor’s degree, not-for-profit, 55% at public four-year, and 22% at private for- 68% read to their children daily in 2007. This compares to 57% profit institutions. of parents with an associate degree, 47% of parents with some college but no degree, 41% of high school graduates, and 26% College completion rates differ considerably by family of parents who did not complete high school. income, parental education level, and type of institution attended. Substantial evidence indicates that the associations described here are the result of increased educational The proportion of adults in the United States between attainment, not just of individual characteristics. the ages of 25 and 34 with a four-year college degree held steady at 24% in the 1980s, but grew from 29% in 2000 to 32% in 2009. Trends in Higher Education Series trends.collegeboard.org 5 OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc EEaarrnniinnggss HHeeaalltthh BBeenneefifittss EEaarrnniinnggss HHeeaalltthh BBeenneefifittss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss Education Pays 2010 Introduction Education Pays 2010 contains data on the financial and in higher education and how different groups in society nonfinancial benefits of postsecondary education. The benefit from those investments. Readers will draw their own indicators in this report provide up-to-date information about inferences about the public policies most consistent with the earnings, employment and unemployment patterns, and evidence provided. nonwage attributes associated with the jobs held by people with different levels of education. Because many of the The Payoff of Higher Education changes that education engenders in people’s lives are outside In this introduction, we take the opportunity to provide our of their work lives, we report on health and lifestyle influences interpretation of the evidence we have gathered. In the as well. Much of the information in this report pertains to the three years since we published Education Pays 2007, median benefits that accrue to society as a whole when more people earnings for four-year college graduates have increased more are college educated. Data on the increases in tax revenues rapidly than those of high school graduates. The 2.3 percentage and the reductions in public expenditures associated with point difference between the unemployment rates for high increased levels of education help to make the return to public school graduates and bachelor’s degree recipients we reported investment in higher education more concrete. The frequencies for 2006 increased to 5.1 percentage points in 2009. Yet, of smoking, obesity, voting, volunteering, and participating questions have intensified about whether going to college is in educational activities with children are also among the worthwhile and whether it is appropriate to encourage young wide range of differences in the opportunities, choices, and people who are on the fence about continuing their education behaviors influenced by participation in and completion of after high school to attend college. We believe it is critical that higher education documented here. more people be in a position to examine for themselves the evidence of the benefits of a college degree, rather than relying Like the College Board’s Trends in College Pricing and Trends on the opinions of others — opinions that are too frequently in Student Aid reports, Education Pays collects and reports grounded in ideology and anecdotes rather than evidence. data. Some of the benefits of higher education documented in this report are widely cited; others are less well known. We It is both reasonable and constructive to ask whether and for bring publicly available government statistics together with whom the expense of postsecondary education is a good less familiar academic research in order to paint a detailed investment. Published tuition prices have been rising rapidly. and integrated picture of the benefits of higher education As documented in Trends in College Pricing, public four-year and how they are distributed. Where possible, we have college prices in particular have risen at very high rates in the summarized complex analyses in a manner consistent with the past few years. But, while all expenses associated with going straightforward presentation style of this report. We provide to college continue to rise, the average net price students references to more in-depth and sophisticated analyses so that pay for tuition and fees at both public and private colleges — readers can pursue issues of particular interest. after accounting for grant aid and tax benefits — has actually declined in recent years. Education Pays is intended as a resource and a reference for anyone interested in understanding the value of investments 6 Education Pays 2010 OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc EEaarrnniinnggss HHeeaalltthh BBeenneefifittss EEaarrnniinnggss HHeeaalltthh BBeenneefifittss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss Our calculation in Figure 1.3 compares the median cumulative The Evidence earnings of high school graduates to those of college graduates Too often, colorful anecdotes about individuals who have had and finds that by about age 33 — after 11 years of work — unfortunate experiences capture the spotlight and lead to higher earnings compensate not only for four years out of the inaccurate generalizations about the dangers of making this labor force, but also for average tuition and fee payments at a major life investment. Journalists tell compelling stories of public four-year university funded fully by student loans at 6.8% students who borrow large sums of money only to find that interest. The earnings of associate degree recipients lead to a they are ill-equipped to complete their studies, or who graduate crossover at about the same age — after more years of work from college and are unable to find appropriate employment. despite the lower tuition payments — because of the smaller It is no surprise that these stories exist; they are real and they earnings premium. Modifying the assumptions underlying are painful. But frequently, these stories are used to convey these calculations might slightly lengthen or shorten the time the notion that the costs of a postsecondary degree outweigh required to make up the investment. The key point is that for the benefits, and for most people this simply is not true. Figure the typical student, the investment pays off very well over the 1.5 in Education Pays 2010 shows not only median earnings course of a lifetime — even considering the expense. for men and women with different levels of education, but the range of earnings of the middle 50% at each level. Our analysis Perhaps even more important, increased earnings are by no notes that although 14% of male high school graduates earned means the only positive outcome of higher education. The as much as or more than the median earnings of male four-year knowledge, fulfillment, self-awareness, and broadening of college graduates in 2008 ($65,800), 86% earned less. About horizons associated with education transform the lives of 20% of male four-year college graduates earned less than the students and of those with whom they live and work. The median earnings of high school graduates ($39,000), while difficulty in quantifying these outcomes or translating them 80% earned more. Figure 1.10a shows that the unemployment into dollars and cents should not lead us to neglect these rate for college graduates rose sharply, from 2.6% to 4.6%, contributions from higher education. Our society would between 2008 and 2009. But the unemployment rate for high become immeasurably poorer if financial pressures were to school graduates rose from 5.7% to 9.7% at the same time. lead us to think of higher education as synonymous with job The data may not be as colorful as the anecdotes, but they tell training. The indicators in Education Pays, both financial and a more realistic story. They also allow for a better understanding nonfinancial, are limited to those that can be easily quantified of which students and which circumstances are most likely to only because of the format of the publication. Our intent is not create the stories of the outliers who attract so much attention. to minimize the importance of the less tangible or quantifiable outcomes of education. A thorough and coherent view of the College Completion benefits on which we focus highlights the significance of our Another reason for doubts about the benefits of higher society’s investment in higher education and provides a broader education is that increasing college enrollment rates over grounding for public policy deliberations. time for all demographic groups have been accompanied by Trends in Higher Education Series trends.collegeboard.org 7 OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc OOtthheerr EEccoonnoommiicc OOtthheerr IInnddiivviidduuaall && CCoolllleeggee EEdduuccaattiioonnaall GGeeooggrraapphhiicc EEaarrnniinnggss HHeeaalltthh BBeenneefifittss EEaarrnniinnggss HHeeaalltthh BBeenneefifittss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss BBeenneefifittss SSoocciieettaall BBeenneefifittss EEnnrroollllmmeenntt AAttttaaiinnmmeenntt CCoommppaarriissoonnss Introduction (cont.) persistently low degree-completion rates. In Education Pays First-generation students and those from low-income 2010, we provide a variety of indicators of college completion backgrounds frequently lack the information needed to make and educational attainment. No one measure is perfect, but the best choices when they do enroll in college. As the it is clear both that many people enroll in college and never indicators in Part 2 of Education Pays reveal, many students earn a degree, and that the gaps in completion rates by family enroll in colleges that are less selective and less challenging income level, parental education level, and race/ethnicity are than those to which they would likely be admitted based on large. High school graduates from low- and moderate-income their academic qualifications, reducing the probability that they families are much less likely than those from higher-income will earn bachelor’s degrees. Figures 2.6a and 2.6b provide families to enroll in college, and the gaps in completion rates information on the differences in completion rates at different are even larger. Unfortunately, this very real problem has led types of institutions. some observers to the unwarranted conclusion that people who do not have strong academic preparation, who do not have It is also important not to discount the value of college the required financial resources, or who are unfamiliar with the experience even for those students who do not earn a degree. expectations and requirements of colleges and universities As Figure 1.7b suggests, although the payoff for earning should not pursue postsecondary education. a college credential is highest, the median return to each additional year of postsecondary schooling is significant. In Research tells us otherwise. Numerous economic analyses other words, the solution is not to advise students to forgo indicate that students who, because of their demographic college because they might not graduate. It is to provide characteristics and academic experiences, hesitate to go better information and advice — and more generous financial to college stand to benefit the most from a postsecondary support — to increase their chances of success. And of primary degree. This finding does not imply that individuals on the importance, all students need and deserve higher-quality margin of college attendance will end up earning more than academic preparation before they reach the college decision those who knew from an early age that they would attend stage. college. It means that the incremental gain in their earnings resulting from a college education is larger. It is relatively rare Solid evidence indicates that our main focus should be for young people whose parents are affluent — or even middle- providing opportunities for postsecondary preparation and class — college graduates to skip college altogether. Those access, and supporting more students in making choices that who choose not to enroll have usually actively considered and will allow them to maximize their postsecondary education rejected the option. But for too many low-income and first- success. generation students, financial and logistical barriers loom so large that the possibility never seems realistic. Many of these students would likely benefit from appropriate postsecondary educational opportunities. 8 Education Pays 2010