College education is something that is progressively becoming more of a necessity to finding a decent job. The amount of money earned by a person is usually higher if that individual graduated from a post-secondary institution. Generally, the higher the education the person has, the more money they will make. This doesn’t just apply to post-secondary school. For example, someone who graduates from high school will usually earn more money than a person who was unable to graduate. Moving forward with their education, a student who attains a bachelor’s degree will earn more than a person who graduated high school. The additional earnings from achieving a bachelor’s degree over a high school diploma increases the average person’s salary by $1 million over a lifetime, (The Value, 2005). In most cases, post-secondary schooling is required to earn a higher rate of pay than that earned by a person who has only graduated from high school.
The average increase in earnings among people with a bachelor’s degree is 75 per cent more than that earned by a person with only a high school diploma. And the amount of money these individuals are earning over their high-school counterparts has increased over time. “For example, for full-time male workers between the ages of 35 and 44, the earnings premium associated with having a bachelor’s degree versus a high school diploma has risen from 38 per cent in the 1980-84 period to 94 per cent in 2000-03,” (The Value, 2005). What’s more, and what many readers might expect, is the quality of the school from which the bachelor’s degree is acquired further increases the amount of money the employee makes in comparison to high school graduates.
But while the earnings are much higher among the well-educated, costs for schooling needs to be considered before a final tally of the advantages of higher education. Furthermore, the earnings that are forgone while the student was in school needs to be considered. “When these calculations are made, the benefits of a college education are seen to be more than three times as large as the costs,” (The Value, 2005). The financier might find the following calculation intriguing: The annual rate of return on a college education is 12 per cent per year – and that’s above and beyond inflation. However, despite the economic benefit, only one-quarter of Americans have a university degree. This is largely due to a lack of brain power, lack of funding or no motivation.
While the Arizona State University claimed the average bachelor’s degree graduate earned $1 million in 2003, the University of Hawaii estimated in 2012 the benefit is $1.2 million more through the duration of a career. The research was compiled from the U.S. Census Bureau. The difference in estimations could be due to minor fluctuations in calculating the amount, but it could be a sign – as research at the Arizona State University has suggested – that there is an trend towards higher income earners possessing a degree. “There is considerable support for the notion that the rate of return on investment in higher education is high enough to warrant the financial burden associated with pursuing a college degree,” (College Degree, 2012). The increase in wages is about $400,000 higher when the graduate holds an associate’s degree.
But the financial benefit to those who hold a college degree goes further than just earnings: The amount of money retained by the graduate is much higher than the amount saved by a person who has only graduated from high school. “A 1998 report published by the Institute for higher Education Policy reviews the individual benefits that college graduates enjoy, including higher levels of savings,” (College Degree, 2012).
Other areas of a person’s life that are related to finances include a greater likelihood of receiving health and pension benefits at their job. Health care costs were also reduced when considering that those with a college education encouraged people to lead healthier lifestyles: “Within each age group, college-educated adults are less likely than others to be obese,” (Baum et al. 2010).
While it is difficult for many people to afford a college education, the investment is well worthwhile. Of course, people need to be smart and dedicated enough to enter the world of post-secondary education, but there are programs that can not only help students pass their courses, but also to attain enough money to pay for their tuition and books. It is also interesting to note that students should be aware of the return of investment. A 12 per cent year-over-year return on the amount of money that is invested into attaining a degree is better than what the average stock earns on the S&P 500. With an increasing societal trend towards post-secondary education, it is likely that the earnings gap between those who have a college degree and those who only have a high school diploma will only increase over time. That is why it is more important now than ever to ensure students enrol in college after they have completed their high school education.
The Value of Higher Education: Individual and Societal Benefits. (2005, October). Arizona State
The Value of a College Degree. (2012). University of Hawaii Community Colleges.
Baum, S. Ma, J. and Payea, K. (2010). College Board Advocacy and Policy Center.