Is a College Degree Still Worth It? A Review of the Literature by Kola Adegoke

Whether a college degree is still worth the investment has recently sparked considerable debate. As tuitions have increased, wages are still stuck at a certain level, and the underemployment rate of graduates continues to grow, more people question whether higher education makes financial sense anymore. This paper will argue that, notwithstanding these challenges, a college degree remains a worthwhile investment in lifetime earnings, career prospects, and quality of life. In light of the literature review, this paper emphatically answers “Yes” by highlighting the significant returns to education substantiated by empirical evidence.

The Economic Value of a College Degree

The financial return on investment in higher education has been well-documented consistently. According to Carnevale, Rose, and Cheah (2011), on average, individuals with a bachelor’s degree earn 74% more over their lifetime compared to those with only a high school diploma. This also supports the analysis of Abel and Deitz (2014), who conclude that, despite the growing cost of tuition, a college degree still commands a wage premium of about 56% relative to high school graduates. As the analysis by Hershbein and Kearney (2014) shows, the commanding wage premium is not the same regarding the field of study but is high across most disciplines. For example, engineering and healthcare degrees have a much higher return than liberal arts; therefore, while there may be some paths to higher profitability, the benefits of college education are pretty positive across the board.

Goldin and Katz (2008) also discuss this issue at great length and describe how the increased demand for skilled workers due to technological advancement has led to higher earnings for those with postsecondary education, a concept known as the “college wage premium.”. Their work underlines that, though the demand and supply for college-educated workers in the twentieth century matched up relatively evenly during the 1980s and afterward, the slowing of educational attainment increased the wage gap between those with and without a college degree. This suggests that higher education remains of increasing financial importance in an ever-more-knowledge-based economy.

Hershbein and Kearney (2014) further highlight how choosing a college significantly influences earnings potential. While engineering and healthcare degrees provide the highest returns, most fields of study still yield higher lifetime earnings compared to not pursuing higher education. These findings affirm that for most graduates, the financial benefits of a college degree outweigh its costs.

Figure 1. Lifetime Earnings Comparison: This bar chart illustrates the significant difference in lifetime earnings between individuals with a bachelor’s degree ($2.8 million) and those with only a high school diploma ($1.6 million).

Addressing Inequality and Employment Opportunities

Other significant benefits of a college education include the prospect of higher employability and career advancement. Carnevale et al. (2011) point out that college graduates are more likely to get jobs offering career advancement, benefits, and long-term stability in addition to the wage premium. They claim that educational attainment within a highly competitive labor market provides an advantage of higher wages at the time of entry and a protective barrier to securing jobs during times of economic decline. This assertion is further strengthened by Abel and Deitz (2014) as it depicted that those persons holding a college degree experienced a lesser risk of experiencing long-term unemployment amidst the Great Recession, an implication of the fact that higher education acts as a shock absorber for negative economic cycles.

Autor (2014) adds that this tendency of the rising role of technology raises demand for the cognitive and interpersonal skills usually developed within higher education institutions. Because of automation’s continuous development, which is substituting routine manual and clerical jobs, college-developed skills have grown increasingly valuable in setting the stage for a student’s future success in sectors with lesser risk from technological displacement. Thus, while getting a college degree is high, the relative cost of not getting one, especially in terms of lost job opportunities, is even higher.

Figure 2. Unemployment Rates by Education Level: This chart highlights the lower unemployment rate (2.2%) for college graduates compared to high school graduates (3.7%). The Social and Non-Economic Benefits of Higher Education

Beyond financial and employment considerations, the literature highlights several non-economic benefits of higher education. Goldin and Katz (2008) identify social mobility, civic involvement, and quality of life improvement. According to them, education impacts separate earnings and welfare, decreasing inequality and enhancing social cohesion. On average, college graduates have better health and higher rates of political participation, which improves their overall well-being compared to non-graduates. While these benefits are often overlooked in economic analyses, they are crucial in evaluating the overall worth of a college education.

Similarly, Autor (2014) echoes the imperative of education to ensure social equity. While the difference in earnings between college and high school graduates has been increasing, according to him, such differences act as incentives to motivate people to pursue college to enhance social mobility. Further, Carnevale et al. (2020) confirm that some of the adverse effects of disparities in socioeconomic status can be improved through higher education pursuits-especially when focused, conscious efforts are made to create access for underrepresented populations.

Figure 3. Employment Rates by Education Level: This graph shows the higher employment rates among bachelor’s degree holders (97.8%) compared to high school diploma holders (96.3%).

Addressing Counterarguments

Critics commonly question the value of a college degree due to rising tuition costs and resulting student debt. Valid, but these arguments in no way dismiss the long-term benefits of higher education. Research by Abel and Deitz (2014) found that the lifetime earnings premium of a degree weighed much higher than the average cost of tuition and debt repayment. Other initiatives involve income-driven repayment plans, increased access to scholarships, and more, which will go a long way toward alleviating the financial burden for many students.

Another issue is the underemployment of graduates. Although some graduates struggle to find employment that reflects their qualifications, Carnevale et al. (2011) argue that this usually happens over a period. Graduates are generally consistent with better salaries and job security over their careers than individuals who have not graduated from college.

Conclusion

While there are valid concerns about the rising cost of tuition and a growing amount of student debt, empirical evidence overwhelmingly supports that a college degree is still worth the investment. Financial returns in the form of lifetime earnings, employment opportunities, and broader social and non-economic benefits make higher education a pivotal pathway to individual prosperity and societal well-being. In other words, further efforts to expand access to higher education should ensure that all elements of the population have equal benefits of a college degree.

References

Abel, J. R., & Deitz, R. (2014). Do the Benefits of College Still Outweigh the Costs? Current Issues in Economics and Finance, 20(3), 1-11. https://www.newyorkfed.org/research/current_issues/ci20-3.html

Autor, D. H. (2014). Skills, Education, and the Rise of Earnings Inequality Among the “Other 99 Percent.” Science, 344(6186), 843-851. https://www.science.org/doi/10.1126/science.1251868

Carnevale, A. P., Cheah, B., & Van Der Werf, M. (2020). The College Payoff: More Education Doesn’t Always Mean More Earnings. Georgetown University Center on Education and the Workforce. https://cew.georgetown.edu/cew-reports/collegepayoff2021/

Carnevale, A. P., Rose, S. J., & Cheah, B. (2011). The College Payoff: Education, Occupations, Lifetime Earnings. Georgetown University Center on Education and the Workforce. https://cew.georgetown.edu/cew-reports/the-college-payoff/

Goldin, C., & Katz, L. F. (2008). The Race Between Education and Technology. Harvard University Press. https://www.hup.harvard.edu/books/9780674035300

Hershbein, B., & Kearney, M. S. (2014). Major Decisions: What Graduates Earn Over Their Lifetimes. Brookings Institution. https://www.brookings.edu/articles/major-decisions-what-graduates-earn-over-their-lifetimes/