In the News
What's a Degree Worth?
This just in: Workers with an engineering degree are likely to earn more than workers with an English degree. That's the findings of a new study from Georgetown University's Center on Education and the Workforce. While the initial response to such news might be a resounding "Duh!" the report does provide students with valuable information about what their degree might be worth. "What's It Worth? The Economic Value of College Majors" includes interactive tables that allow users to compare 15 major categories of study by median earnings.
Aside from quantifying just how much more a computer science major is likely to earn than a social work major (about $38,000 more per year), the report shows the importance of market value in making the college choice pay off. Students who overpay for a bachelor's degree in a low-paying field may find that they get very little return on their higher education investment.
Strategy Tip to Make College Pay: In our book, Making College Pay, we show you how to calculate your College Payback Ratio. The Georgetown University report will help you find one of the pieces of information you need for this calculation, the “Marginal Market Value” (MMV) of your college degree. Try to keep your College Payback Ratio between three and five. Check out Chapter 3 in Making College Pay for help in calculating the College Payback Ratio.
Is College Worth the Cost?
Nearly 60 percent of Americans say higher education does not provide good value for the cost. That's according to a recent Pew Research Center survey of more than 2,000 U.S. adults. An even higher number -- 75 percent -- say college is unaffordable for most families. Despite that negative view of cost, roughly 9 out of 10 college graduates say college paid off for them and 9 out of 10 parents expect their children to go to college.
Those survey findings point to the higher education paradox students face today: A college degree is more important today than ever before to land a good-paying job, but escalating costs and stagnant earning potential mean that higher education is no longer the "sure bet" it once was.
Strategy Tip to Make College Pay: There are steps students and parents can take to lower the cost of and raise the market value of your college degree … even if the degree isn’t in one of the science or technical areas. Chapter 4 in Making College Pay offers strategies and tools for getting a better return on the higher education investment. Chapter 5 tells you how to increase the marketability of any degree.
Is College Right for Everyone?
Guests on The Diane Rehm Show on National Public Radio had an interesting discussion recently about whether higher education is really serving students well.
New York-based venture capitalist and author James Altucher suggested that students would be better off if parents gave them money to start a business than to go to college. Although he's right that not all young people need to go to college and that people tend to overlook the opportunity cost of putting off entering the workforce for four to six years, his suggestion doesn't seem very practical. For starters, most families don't have a huge pot of money to invest in a business; they rely on financial aid, including student loans, to finance college. Even though running a business is an educational experience, it's also a risky endeavor. Most new businesses fail within five years. Those are even worse odds than the six-year college graduation rate, which stands at about 57 percent.
Making College Pay takes a strategic look at all the topics discussed on the program: student debt, return on investment, marketable skills, job prospects and lifelong learning.
Buried in Debt
Students graduating from college in 2011 are leaving school with more than a degree; they also take with them a mound of debt. This year's graduates have the dubious distinction of being the most indebted ever. According to the Wall Street Journal, average student loan debt now approaches $23,000. That’s 8 percent more than last year and 47 percent (in inflation-adjusted dollars) more than a decade ago (in inflation-adjusted dollars). These new grads are going to feel squeezed from both ends. Their higher levels of debt are not being matched by higher wages in the marketplace. In fact, the article notes that the Collegiate Employment Research Institute estimates that average salary for holders of new bachelor's degrees to be $36,866, down nearly $10,000 from 2009.
What's in a Ranking?
Have you ever wondered about college rankings? Or do you simply accept the various lists as reliable guides in helping you pick the "best" school. In this case, of course, "best" would mean the schools that rank the highest. Well, best-selling author Malcolm Gladwell has spent some time pondering the gold standard of school rankings -- the annual U.S. News & World Report's Best Colleges. Some on the Internet have suggested that Gladwell makes "mincemeat" of the U.S. News ranking system in his article “The Order of Things: What college rankings really tell us.” The article appeared in the February 2011 issue of New Yorker magazine. (You can buy access to the New Yorker here but the Colleges That Change Lives website has posted a PDF version of the article.
Essentially, Gladwell questions whether a ranking system that attempts to rate so many different kinds of schools on so many different qualities really ends up telling us much at all. "At no point do, however, do the college guides acknowledge the extraordinary difficulty of the task they have set themselves," he writes. Rankings, he says, often don't measure what they set out to, frequently rely heavily on reputational prejudices and tend to rest on "relatively arbitrary judgments."