Do college degrees offer best financial outcomes for all students?
A new study from the Georgetown University Center on Education and the Workforce largely backs one truism about the power of postsecondary education – those who pursue it to completion enjoy better financial outcomes. But not always.
In fact, the CEW report The College Payoff: More Education Doesn’t Always Mean More Earnings shows that some high school diploma recipients who do not further their education earn more than some degree holders and that age, race, gender, types of occupations and location can all determine the salary potential of students.
“More education doesn’t always get you more money,” said Anthony Carnevale, CEW Director and lead author on the report. “There’s a lot of variation in earnings related to field of study, occupation, and other factors.”
A stunning 16% of those who received high school diplomas and nearly a quarter of those with some work at colleges made more than 50% of bachelor degree holders. However, the CEW notes that the average lifetime earnings gap between those with no college education and those who have achieved bachelor’s status still stands at a whopping $1.2 million.
The exceptions to norms are nonetheless notable higher up the education chain. Even 25% of bachelor’s degrees holders earn more than those who possess some masters’ or doctoral degrees. The CEW report, for example, shows that those who pursue fields such as engineering or architecture earn around $400,000 more in their lives than those with a master’s.
Of course, that’s not true for all fields. Professional degree holders ($4.7 million) and doctoral degree holders ($4 million) typically earn more in the their lifetimes than those with bachelor’s degrees ($2.8 million). Those with professional degrees at highest levels earn twice as much as bachelor’s holders at the top end ($8.4 million to $4 million), so it is important that students matriculating from high school through college understand the outcomes of the paths they’re choosing.
“Students need professional guidance on the economic outcomes of college and career pathways before they make one of the biggest decisions of their lives,” said Ban Cheah, CEW research professor and senior economist.
Inside the numbers
Despite the push for gender and racial equity in earnings, women and people of color still earn less than their male and White and Asian counterparts overall despite the same levels of education.
Authors highlight that women need to have “one more degree than men to have the same earnings.” Women with master’s degrees earn about $1 million less than men with those degrees. Even those with only high school diplomas tend to earn around $500,000 less in their lifetimes. At the top end of earners with professional degrees, men make an average of $5 million more than women.
There are also significant gaps in terms of race, with White and Asian bachelor’s holders earning about $600,000 more than Blacks and Hispanics. Asians far outpace other subgroups among those who have master’s degrees, earning an average of $4 million in their lifetimes, compared with $3.2 million for Whites, $3 million for Blacks and $2.7 million for Hispanics.
Location also plays a part in difference in earnings, though it is important to factor in cost of living. The states/areas with the highest lifetime payments among bachelor’s degree holders include Connecticut, Virginia, Maryland, Ohio, Illinois and Washington, D.C. Connecticut and Alaska topped the list for those with associate’s degrees, while the top earners among master’s holders were from Connecticut, Maryland, Virginia and Washington, D.C.
In terms of fields of study, the bachelor’s career paths with the highest median earnings potential include:
- Architecture and engineering: $3.8 million
- Computers, statistics and math: $3.6 million
- Business: $3 million
- Physical sciences: $2.9 million
- Health: $2.9 million
- Social sciences: $2.8 million
- Biology/life sciences: $2.8 million
- Communications/journalism: $2.7 million
- Agriculture/natural resources: $6 million
- Law and public policy: $2.6 million
The paths to success
Fields of study more than level of degree achieved may determine earnings potential. The average person pursuing health practice occupations can earn as much as those with some college work. Those who earn a high school diploma or GED in legal occupations also may earn as much as those with associate’s degrees. And those in STEM fields with bachelor’s degrees tend to earn more than those with professional degrees.
One reason that degree holders through all levels tend to outpace their lower-level counterparts in career earnings is that as they age, they tend to receive pay boosts through their lifetimes. That isn’t the case with those who possess high school diplomas. Those with doctoral and professional degrees tend to start slow before salaries soar by the time they hit 35, eclipsing annual salaries of $90,000 and $120,000, respectively. Bachelor’s holders also surge, though not as dramatically, to around $60,000. Almost all groups tend to level off and see few significant pay raises after age 50.
So, what paths should students choose?
“The simple advice to high school students to ‘go to college’ no longer suffices,” study authors say. “The number of postsecondary programs, colleges and universities, and occupations has grown significantly in the past few decades, creating countless potential combinations of pathways through education and careers.”
But in order to make that a reality and maximize those earnings, Georgetown authors say an expansion of career counseling starting in middle school and funneling through college must occur.