Is College Worth the Investment?

College as an Investment

In this article, we will tackle the data behind the U.S. Department of Education’s NCES survey comparing educational attainment and workforce characteristics.  We will cull the most important pieces of data from the NCES study and summarize the findings as it relates to your college trajectory.  We will break down the investment in your education utilizing four basic metrics: unemployment rate, labor force participation rate, earnings, and employment to population rate.

Labor Force Participation Rate

The labor force participation rate is defined as the percentage of people employed or actively seeking work.  The correlation drawn from the study is a higher level of education attainment, the higher the labor force participation rate.  As an example, the cohort of 25- to 64-year-olds with only a high school diploma had a labor force participation composite rate of 68% in 2014 across all ethnicities. At the same time, the same age band with a bachelor’s degree averaged an 86% labor force participation rate.

Bottom Line: The greater level of education puts people to work at a much greater rate than not having an education.

Unemployment Rate

As defined by the NCES, the unemployment rate reflects the percentage of people not currently employed and have met specific requirements to find work during the prior four weeks.  We will look at two salient statistics relating to unemployment: unemployment rate by education attainment and unemployment rate by age.

During the 2015 study, the findings suggest a 9% unemployment rate for 25- to 64-year-olds with no high school diploma compared to a 2% unemployment rate for the same age group with a bachelor’s degree or greater.  For the same timeframe, the unemployment rate for the cohort of 20- to 24-year-olds without a high school diploma was 20%.

Bottom Line: The higher level of education attainment significantly reduces unemployment rates across all ages.  Also, younger people without an education have a significantly tougher time finding work.

Employment to Population Ratio

The employment to population ratio is basically the percentage of the population that is employed.  Results of the study were consistent with the previous data sets reflecting a stark trend relating to education.  More specifically, the 25- to 34-year-old group with at least a bachelor’s degree was noted as having an 85% employment rate compared to 70% with only a high school diploma compared to 57% with no high school diploma.

Bottom Line:  Employment rates vary significantly between people with a college degree and those without a college degree.

Earnings

The earning power of people with a college degree is proven to be significantly greater than people without a college degree.  The NCES survey illuminates this fact for both men and women across the board.  In 2014, males with a bachelor’s degree or greater earned 67% more than their counterparts with only a high school diploma.  Likewise, females with a bachelor’s degree or greater earned 68% more than their counterparts who only completed high school.

Is Attending College a Good Investment?

Individuals holding a college degree have found to be better prepared for the workforce, more employable, enjoy greater job stability, and earn significantly more than those without a college degree.  If you were asked the question “is college worth the investment” the answer, based on the data, must be a resounding YES.

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