College degree: A good investment but not without risks

New research paper advises students that careers they choose will impact the lifetime earnings. (Photo: Curtis Compton / Curtis.Compton@ajc.com)
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New research paper advises students that careers they choose will impact the lifetime earnings. (Photo: Curtis Compton / Curtis.Compton@ajc.com)

Credit: Curtis Compton / Curtis.Compton@

New research paper advises students on making one of life’s biggest financial decisions

The parents on tony campus tours who dare to ask admissions directors whether their colleges can assure their child will graduate into a high-paying job often get an icy response: “If you are sending them here to get a job, you are sending them to the wrong place.”

“If you are an elite school, what you are really selling is not jobs, you are selling prestige,” said labor economist Anthony Carnevale. “Those kids at those elite schools come from families that give them a great K-12 education and a great college education — majoring in who knows what — and by age 32, they are all in good jobs.”

That’s not the case with students from lower-income households who don’t have the luxury of majoring in Japanese anime at 20 and deciding at 30 to pursue an MBA from Duke. Their path to the middle class through higher education has to be more direct as they can’t afford detours.

“This system has a very strong race and class bias,” said Carnevale, describing what he called white flight to the bachelor’s degree. Since 1995, more than 80% of new white enrollments in higher education have been at the top 468 colleges, while more than 70% of new Black and Latinx enrollments have been at open-access two-and four-year colleges. That matters because selective colleges spend two to five times as much on instruction per student as open-access colleges.

White families decamped from cities to suburbs, bringing good jobs along with them and the tax base to grow good K-12 schools. When the job market shifted in the 1980s and a college degree became vital, these families were able to send their children to good schools, said Carnevale, director of the Georgetown University Center on Education and the Workforce.

Carnevale is the co-author of a new research paper, “Navigating the College-to-Career Pathway: The 10 Rules of Moving from Youth Dependency to Adult.” The paper reaffirms the economic benefits of college, but warns the payoff depends on what students study and the careers they enter.

States are now required to publish average earnings by program and campus. On Georgia’s site you can see a University of Georgia philosophy graduate has median earnings of $38,395 five years after graduation. In contrast, a UGA computer science grad has median earnings of $89,266 at the five-year mark and a business school grad earns $74,652.

While prospective college students can now review the salary averages, Carnevale said it’s more effective to talk to teens about how what they study will impact lifetime earnings. “We know information alone just doesn’t do it. You have to have somebody talk to somebody,” he said. “But there are no counselors out there, let alone career counselors.”

So, he and his co-authors offer parents and high school students a series of rules to follow in making the expensive decision of where to attend college. Among them:

Know before you go. Understand the potential return on investment before choosing a college and a program of study. For example, while student debt is considered a mistake, colleges at which students have high levels of debt are often those with high graduation rates and high earnings for students who attend them.

When faced with poor job prospects due to recession, go to school. It’s much better to enter the labor market during a recovery because a first job influences the earning and learning trajectory of a career.

Get more education. It typically leads to higher pay and better employee benefits than less education. Workers with an associate’s degree earn 32% more than workers with no more than a high school diploma. Workers with a bachelor’s degree earn 74% more.

Don’t worry that much about where you go to school. A degree from a big-name college adds value, but not as much as most people believe. Students are better off at institutions with high per-student spending, because that increases graduation rates and access to additional educational opportunities.

Know the costs and benefits of your choice of major. At the median, majors like humanities, liberal arts, education, and psychology rarely catch up with the highest-earning majors in computing, business and engineering. (Top paying job out of college? Petroleum engineer with average starting salary of $106,000.)

If you are a woman or a member of an underrepresented group, the deck is stacked against you. Women may need to get an extra degree to earn what a man with a lower degree earns on average. Students from underrepresented racial and ethnic groups are less likely to attend selective institutions with higher advanced degree attainment and earnings. So it’s in their best interest to enroll in the most selective institution they can to maximize the benefits of their college experience.

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