WASHINGTON, D.C.-How much is a college degree worth? In dollars and cents it may surprise you. In 2005, the average person in the workforce with a four-year college degree earned $50,900.
Your typical full-time year-around worker with only a high school diploma earned $31,500. Having a college degree means not only earning 62 percent more, but it also improves access to employer-sponsored health benefits and pension plans.
There are non-monetary benefits as well. Smoking rates among college graduates are significantly lower than among other adults, and engaging in leisure-time exercising is also higher.
These are some of the findings in an updated edition of Education Pays: The Benefits of Higher Education for Individuals and Society, just released by the College Board on Wednesday, September 12, at a hearing on Capital Hill in Washington. The source data for the analysis comes from the Department of Education and the U.S. Census Bureau.
It is little wonder that young adults are seeking college degrees when you consider the monetary benefits.
"The proportion of adults in the United States who have completed a four-year college degree has doubled over the past 30 years and is almost six times higher than it was in 1940," says the report. Today, the percent of adults 25 and older with a college degree is 28 percent; in 1970, it was 11 percent.
"The typical bachelor's degree recipient can expect to earn about 61% more over a 40-year working life than the typical high school graduate earns over the same period," says the report. The expected lifetime earnings "premium" of college graduates who also have earned a higher degree is over one million dollars (in today's dollars, $570,000) more than high school graduates.
This relationship between education and income holds consistently across all educational levels—some college, 2-year degree, bachelor's degree, Master's degree, Doctoral degree, and professional degree. The data show unequivocally that as median lifetime earnings increased, the more education one had acquired. This is particularly evident at the high end of education: the median lifetime earnings for doctoral degree holders is 2.4 times higher than median lifetime earnings for high school graduates.
"…After adjusting for inflation, the earnings of male college graduates are no higher than they were in the 1970s, and the earnings of female graduates have increased only moderately," acknowledges the report. However, the earnings gap between high school and college graduates as described above has grown dramatically. And it holds up across racial and ethnic groups.
For example, Asian males with only a high school degree earned a median income of $32,500 in 2005; Asian males with a Master's degree were earning median incomes of $54,100. Hispanic females with a high school degree made a median income of $23,100, while the same with a Master's degree were earning $38,200.
Gender Issues
Beginning in 1988, female enrollment in a postsecondary education institution immediately after graduation exceeded the male high school graduates. In 1967, the enrollment rates were 58 percent for males and 47 percent for females. By 2005, that had reversed while increasing for both: 67 percent for males, 70 percent for females.
The gender gap in earnings for the same education level is substantial. Male bachelor degree recipients in 2005 earn a median value of $60,000, while female BA holders earned only a median of $42,200. This gap holds steady across all levels of education. At the high end of the educational ladder, for the upper 25th percentile for women with professional degrees, the earnings exceed $125,000. For men with professional degrees, the upper 25 percent earned more than $197,000.
The range of incomes within educational categories tends to widen as the educational level rises.
Other Health Benefits of Higher Education
The availability of employer-sponsored health benefits and pension plans increases with each level of education. For example, among full-time year round workers, 25 and older, 69 percent of four-year college graduates were offered pension plans by their employers in 2005, compared to 53 percent of high school graduates and only 32 percent of those who did not complete high school.
It is a well established finding that smoking rates among college graduates is significantly lower than smoking among other adults. In 2005, only 9 percent of four-year college graduates smoked, compared to 26 percent of high school graduates. A higher percentage of the college graduates who smoked made an attempt to quit in the past 12 months than the high school graduates. In general, the study finds they adopt a healthier lifestyle. In 2005, 61 percent of college educated, ages 25-34 exercised vigorously compared to 31 percent of the high school graduates.
Do More College Educated Citizens Mean a Better Society?
The study gives data that show that higher rates of volunteering, voting, donating blood, and lower unemployment and poverty rates correlate to higher levels of education. On voting, for example, in the 2004 presidential election, among the 25-44 age grouping, 76 percent who were college graduates reported voting, compared to 49 percent of high school graduates.
Morse stated that the 58 percent Hispanic high school graduates and 59 percent African American high school graduates, who went directly to college were troubling numbers for her. The reason is that in 2005, 71 percent of white recent high graduates went directly to college, according to the report.
The report also shows that higher levels of education lead to both higher earnings, but also higher tax revenues for federal, state, and local governments. Whereas the typical high school graduate paid $6,600 in taxes out of an income of $31,500, a person who attained a college degree, but did not go higher, typically paid $11,900 in taxes out of the $50,900 earned, or nearly 80 percent more. So, the report argues that society reaps a benefit from a more highly educated population.
What is it about the nature of the college education experience that brings about the favorable outcomes cited in the report?
"We don't know how college produces these differences… We need to understand this a lot better," said Michael McPherson, former president of Macalester College in St. Paul, Minnesota.
Researchers tend to be especially cautious on attributing causal connections between the various outcomes described here and attaining higher education. The persons who have the skills and motivation to succeed in college may be able to make more income even without attending college than the other high school graduates. Conversely, if average high school graduates were to have gone on and attained a college degree, their earnings would not necessarily have reached the level of the average college graduate.
The full report is available online at: http://www.collegeboard.com/edpays2007
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