How Valuable is Your College Degree?

If anyone should be an advocate for higher education, it’s me. The degree I earned from the University of NH in the 1960s in, of all things, sociology is the single most rewarding investment I (and society) made in my life. Back then there was no question about the value of a four-year college diploma—even a liberal arts degree. You knew with a degree, the job of your choice was awaiting you on the heels of graduation.

But today, the confluence of rising higher education costs and reduced job and earning opportunities in this economy are causing more parents and students to wonder: Is a traditional college education worth it?

Conventional Wisdom

Conventional wisdom is still that a conventional degree is worth it. There are now 11 million students enrolled in U.S. four-year college programs—a 67 percent increase since 1991. This is despite costs at four-year institutions nearly tripling during that time frame. That’s well in excess of the rate of inflation. The cost of one year’s tuition, room and board at a private, four-year college is now close to what I paid for my first house.

These costs are clearly a burden for families and graduates. There are now 37 million student loan borrowers with a combined total debt of nearly $1 trillion, and NH students have the highest student debt in the country at just under $32,500. And that debt doesn’t go away quickly—4 million of U.S. borrowers are in their 50s. Rising student debt is hampering the ability of recent grads to buy a house. In 2011, first-time buyers (who have a median age of 31), fell to the smallest percentage of total home purchasers since 2006.

Making Degrees Pay

The U.S. unemployment rate for college grads in March 2012 was 4.2 percent. That’s uncomfortably high, but well below the 8 percent rate for high school grads with no college and the 13 percent rate for high school drop-outs. Then there are earnings. According to a study by the Georgetown University Center for Education and the Workforce, on average, someone with a bachelor’s degree earns almost a million dollars more during their lifetime as compared to someone with a high school degree ($2.3 million versus $1.3 million). The difference is even greater with advanced and/or engineering diplomas as those higher degrees lead to more than $3 million in lifetime earnings on average.

New Hampshire Employment Security recently released its 10-year projection of job opportunities, and the results are revealing. Overall, they are expecting the state to add 68,500 jobs during this decade. What’s startling is that more than half of that job growth will be in careers that require only a high school degree or less, including sales clerks, home health aides and cashiers. Only 25 percent will require a bachelor’s degree or more.

The top 10 growth categories requiring a bachelor’s degree include five in the tech sectors. (For the full report, visit www.nhes.nh.gov/elmi/products/documents/projections.pdf.) It’s hard to go wrong in engineering disciplines, whose earnings nearly double those of most liberal arts degree holders.

Is there a good alternative to a four-year degree? In its March “New Hampshire Economic Conditions” report, NH Employment Security points to certificate programs as a promising alternative to a bachelor’s degree, noting a quicker entry into the job market than a two- or four-year program; job-specific training; and some courses that apply towards a more advanced degree.

(If you want to learn more about certificate occupations check out www.nhes.nh.gov/elmi/products/licertocc/.)

Public Policy Implications

There are steps that can be taken to create the skilled workforce necessary to grow NH’s economy. For starters, information about in-state job prospects and earnings by career path should be more readily available to parents and students, as early as when they enter high school. Post-secondary education options are more diverse, including certificate programs, online learning, and transferable credits from community colleges. Information about those options needs to be more transparent for both students and parents who will be footing the bill.

Lastly, there is only so much cost shifting lower and middle class parents can handle. The College Board calculates that NH’s in-state tuition and fees ($14,500 per year versus a national average of $8,650) is the highest in the country. A well-educated workforce is NH’s bottom line economic advantage. Times are tough for state government, but more University System budget slashing may prove to be penny wise and pound foolish in the long run, considering the superior job and earnings prospects of an educated workforce versus an under-educated one.

Russ Thibeault is president of Applied Economic Research, an economic and real estate consulting firm in Laconia. Contact him at 603-524-1484.