What You Need to Know About the Value of Education

Posted on February 4, 2014 // Leave a Comment

We know a lot about the cost of an education. It costs too much. Here are some other things we know about education. Growing student debt is a student problem that is rapidly becoming a threat to growth of our economy. These issues are getting a lot of attention these days. In contrast, there is little good information about the value of an education today. This post is devoted to the value indicators.  Buzz Today Source: Pew Research Center “The Growing Economic Clout of the College Educated.”College-educated households are the only households whose incomes have grown on a per household basis from 1991 to 2012. There are a number of factors at play in boosting the household incomes of the college educated relative to less-educated households. A primary factor is the better fortunes of the college educated in the labor market. The Georgetown Center on Education and the Workforce finds college graduates earn nearly twice as much as workers with just a high school diploma.

Value Proposition number 1: Education is the key to upward social mobility. Research shows that it is possible to move up in society – with an education. Source:  Federal Reserve Board of San Francisco: A college education can counter the effects of birthright. Only 5% of children born into the bottom quintile (lowest 20%) who don’t graduate from college end up in the top quintile (top 20%). By contrast, 30% of bottom-quintile children who graduate rise to the top quintile (from the bottom 20% to the top 20%). This is clear evidence that a college education is key to the American Dream of having a better life than one’s parents.

Value Proposition number 2: College favorably impacts skills that are important to compete in our modern global economy.  Source: “How College Affects Students: A Third Decade of Research”. All of the following critical skills were found to have statistically significant improvement as a result of a college education. The list includes:

Verbal skills    Quantitative skills     Speaking skills      Written communications     Critical thinking skills      Conceptual complexity.

A survey of employers shows that employers are looking for these very skills.  A report from the American Association of Colleges and Universities  provides data from a January, 2014 survey of 318 corporate executives showed that 93% of those responding agreed that “a demonstrated capacity to think critically, communicate clearly, and solve complex problems” is more important than the skills of the candidate’s undergraduate major.  And 75% of those surveyed said they want more emphasis on critical thinking, problem-solving, written and oral communications and applied knowledge.  And 95% said they want new hires to demonstrate ethical judgement, integrity and the capacity to continue to learn.

Value proposition number 3: College educated households are the only one’s with growing household incomes. All other levels of education have actually declined.

Household Income (2012 dollars)

Education                                  1991              2012             Percent change

Less than high school             $33,959       $32,631                 -4%

High School                                 54,707         52,199                  -5%

Some College, no degree           66,038        63,008                 -5%

Associate’s                                    72,407        68,902                  -5%

Bachelor’s                                     92,289       100,637                +9%

Master’s                                        104,193      114,897               +10%

Professional                                 150,869       180,671               +20%

Doctorate                                      131,365       150,087               +14%

Source:  Pew Trust Research

When you look at the difference between the income for Some College, no degree and the income of a Bachelor’s degree you can see why it is so very important for those with some credits but no degree to complete their college education and graduate.  The difference in income is worth, on average, over $37,000 each year. There are about 38 million Americans in this position.  The irony is that with wise choices, it could cost as little as another $25,000 to complete that degree. Doing that would be of immense value when the value created every year is much more than the total investment.

The cost of an education is pretty clear. The value of an education is less clear. And least clear of all is how to get the value of an education without incurring the high costs that are so widely reported these days. For the latter, see Your Future is Calling for exercises and valuable data.

Filed Under: Adult learning, Career, Debt // Tagged: , , , , , , , , , ,

Five Things You Need to Know to Determine: “Is College Worth It?”

Posted on January 31, 2014 // Leave a Comment

Not needed. High debt. No Job. Too costly. These are all things people are saying these days in answer to the question: “Is College Worth It?”. The two extreme answers are ALWAYS and NEVER (see BUZZ Today here). Neither of these answers is correct. If always and never are incorrect, the answer must lie somewhere in between these two absolutes. Indeed it does, which leads to the real question you should be asking which is: “When is College Worth It?” It is the answer to this question which will help you make better decisions for yourself and your children.

Buzz TodaySource: Alen Weiss, The Fallacy of College. “College not only isn’t for everybody, it might not be for anybody.” In contrast: Source: Time, December 2013, Gallup Poll – Majority of Americans Think College Education Is ‘Very Important’. The Gallup poll found that seven in 10 Americans consider a college education to be “very important,” up from 36 percent in 1978. Only six percent of respondents said college education was “not too important.”

First Thing You Need to Know Any college degree that traps you in a life of misery is not “Worth It” no matter how much or how little you spend to earn that degree. Misery is about you. It is not about college or even jobs. You have to begin with “who you are”. The decisions you make about college majors, careers and specific universities all must be linked to you and what fulfills you as an individual. This is the starting place for your college decisions that I talk about in Your Future is Calling.

Second Thing You Need to Know  One of the things that significantly increases the cost of college is the tradition of using the college to “find yourself”. This might have been an option in the good old days. It is the best option today. Going to a campus for five or six years is just too expensive today. There are much more efficient ways to get answers to this critical question. Degree Accelerator and Caliper assessment.are proven online instruments to efficiently get at the “who you are” question.

Third Thing You Need to Know The career you pick as well as the college you pick have significant impact on your earning power. But what is traditionally done is to pick a college or university and then figure out what to study. This is what I call Major – Major – Major in Your Future is Calling.  The Major – Major – Major decision is one of the main reasons the average number of credits of college graduates is on average over 10% more than than required for graduation. This excess both delays earning income and increases student debt.

Fourth Thing You Need to Know The vast majority of students pay only about one half of the list price of tuition, yet 54% of the potential students judge a college’s expense by sticker price alone without considering aid that could be offered. If you pay double the cost for tuition it makes every degree less likely to be “Worth It” from a financial point of view.

Fifth Thing You Need to Know Beyond getting the best discount. In college language this is stated in terms of grants and merit scholarships. In addition there additional way that the total cost of the education can be reduced

– Enroll in a community college to get a low cost education for your first two year general education requirement.

– Test out competency with CLEP testing from the non-profit College Board.

– Earn credit for prior learning assessment for life experience from CAEL and Learning Counts.

In summary, the five things that you can do to increase the answer YES to the question: “When is College Worth It?” are listed in summary here:

Use modern tools to determine “who you are”. Use data available on O*NET or Bureau of Labor Statistics to select a career before taking your first class. Learn what the average grants and merit scholarship awards are at the college you plan to attend. Know the facts on tuition costs and negotiate. Further reduce costs by avoiding Major – Major – Major. Finally further reduce costs through the approaches listed in detail in the Fifth item listed above.

Filed Under: Adult learning, Career, College degrees, Debt // Tagged: , , , , , , , , , ,

What You Need to Know Before You Pick a Major or a University

Posted on November 27, 2013 // Leave a Comment

“Is College Worth It?” The answer is yes only if you chose wisely. College graduates had, on average, over $32,000 of debt upon graduation in the spring of 2013. The major on their degree had a lot to do with their ability to earn an attractive living and manage that debt.

Buzz TodaySource: American Institutes for Research. An analysis of the earnings of recent college graduates in five states finds that those who went to elite institutions do not necessarily earn higher salaries than their peers, that some certificates and associate degrees are far more lucrative than four year degrees, and that when it comes to science, technology, engineering and math (STEM), students who study biology or chemistry will earn far less than those in the other three fields.

The traditional sequence for individuals going to a college or university has been University – Major – Degree – Career. The reality is that for over half of those receiving a bachelor degree in America the sequence is actually more like: College – Major 1 – Major 2 – Major 3 – College 2 – Major 4 – Degree (finally) and then look for a job.

Has this been your experience? There a couple of things to observe about this typical sequence. The first thing is how much emphasis is placed on the reputation of the college or university. It is as though getting into a prestigious university is all one needs to do to have the golden ticket to a successful life. What we see in the BUZZ Today here is that this is not true.  The research shows that the major/career you select is far more important to your earnings future.

So if being accepted by an elite (highly selective university) does not assure you of economic success, what does it tell you?  Being accepted by a highly selective university tells you that you are among the smartest people in the country. That is nice to know this and does tend to make one feel good about ones self. But in the end, you are smart whether you go to university A or a less prestigious school B. Your smartness goes with you, it doesn’t stay with the university you decide to attend. The bottom line is that you do not have to pay the high tuition costs of the elite university when it comes to having the best chances of making a decent living. Conversely, you are not destined to a substandard living standard if you do not get to go to Harvard or Yale. What is far more important than where you go is what you study – your major.

The major you select is closely tied to the career you are targeting for yourself. To pick the right career you first must know “who you are” – something I discuss in detail in my book “Your Future is Calling.” I will defer a more detailed discussion of the “who you are” challenge for a later post. For now lets return to the career/major discussion.

The amount of earning power related to specific majors/degrees is truly amazing. Data from the very valuable web site CollegeMeasures is loaded with very important information about what specific majors and careers are actually worth in the real world. For now let me leave you with one direct comparison for bachelor graduates in the state of Virginia. On average, such graduates with a psychology degree (one of the most popular majors in American universities) had first year earnings of $29,040 compared to first year average earnings of $51,378 with an engineering degree.

In conclusion for this post:

1. You need to learn to prosper

2. What you study is far more important to your income than where you study.

3. You can save a lot of your education expenses by avoiding Major – Major – Major in combination with selecting your career/major before enrolling in any specific program or any university.

Filed Under: Adult learning, Career, College degrees, Debt, Elite universities // Tagged: , , , , , ,

How to Get Both Quality and Lower Cost in College – I

Posted on September 17, 2013 // Leave a Comment

Here is valuable information about how to have both lower education cost and still get the quality that you need to advance your career. Contrary to general opinion, quality and lower cost in higher education are not mutually exclusive. You can have both but you have to know how to select the university to enroll in.

Confused about what you need to do to both reduce your cost and get quality in higher education? It’s no wonder. The number of things you have to consider is mind boggling and there is not very good information available for you to make this important decision.

In the first part of this series I will share details you need about the most confusing part of this decision – quality. The cost savings come later.

Buzz Today Source: How College Affects Students: Volume 2 – A Third Decade of Research “Institutional Quality: academic expenditures per student, faculty-student ratio, percentage of faculty with Ph.D.s, tuition costs, reputational ratings, faculty salaries, and selectivity… Most have employed institutional selectivity as a single proxy measure for institutional quality.”

In Buzz Today we see how both the public and the researchers have viewed quality in higher education. In later postings of this series I will discuss more details about education quality. In those postings, I will share details on what education should be doing for you. For now, let’s stay with the common beliefs about university quality, most particularly, institutional selectivity.

Princeton University is ranked as the number one university in America by the US News and World. Princeton university is highly selective and becoming more so. At Princeton, the overall acceptance rate in 2014 for the class of 2017 was 7.29%. This is down from 9.9% in 2003. The selectivity is even more dramatic when we look at the details: 10,629 of the 26,498 applicants (40% of the total) had 4.0 grade point averages.

The truth is that, for working adults like you, Princeton University is not a feasible college choice for even if you had 4.0 grades and the money to pay the $40,170 annual cost. The point is that selectivity as a quality measure simply does not help you make the decisions you need to complete your education.

But wait! I have some good news for you. Even though selectivity has become the representation of quality in American higher education research indicates that it is not that important to the true quality of your education. Here is what the researchers tell us: “student body selectivity in and of itself may tell us little about institutional influences on general cognitive skills and intellectual growth.” In plain English, what this means is that you are not domed to an inferior education if you do not go to Princeton or Harvard.

What you need to look for to get a good education at a reasonable cost involves things other than institutional selectivity. In future posts I will share about things like cognitive skills, problem solving, communications skills and other true quality dimensions of higher education.

Filed Under: Adult learning, Career, College degrees, Debt, Elite universities, Price // Tagged: , , , ,
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