Review: The Value of College Degrees by Eric Digest

The Economic Value of Higher Education

Before reviewing this article, I would like to define and explain one important concept that that Kathleen Porter, the author of the article, "The Value of a College Degree," touched upon.

Let's say you have three choices to spend 2 hours of your day. You can either study, go to the gym or go to work. I will put a dollar value for each and they are: $13, $12, and $9 per hour, respectively. In this example, your opportunity cost is $24 ($12 (go to the gym)x 2 = $24) if you decide to study instead of going to the gym. Note that most people think that the opportunity cost is the addition of $12 and $9 but it isn't because you can only do one thing at a time.

I'm discussing this concept because it is very important in your decision making whether it is for short-term or long term. With regards to the value of a college degree, the opportunity cost lies with the difference in the income you can make when you compare your income as a high school graduate vs. a college graduate. In this case, your opportunity cost can be $10 per hour or $1 Million over a life time, on average (which means that the difference can be higher or lower).

Now, let's look at the points when she wrote it for Eric Digest in 2002:

Excerpt from Article: There is considerable support for the notion that the rate of return on investment in higher education is high enough to warrant the financial burden associated with pursuing a college degree. Though the earnings differential between college and high school graduates varies over time, college graduates, on average, earn more than high school graduates. According to the Census Bureau, over an adult's working life, high school graduates earn an average of $1.2 million; associates degree holders earn about $1.6 million; and bachelor's degree holders earn about $2.1 million (Day and Newburger, 2002).

Photo by UBC Library Graphics

Excerpt from Article: A 1998 report published by the Institute for Higher Education Policy reviews the individual benefits that college graduates enjoy, including higher levels of saving, increased personal/professional mobility, improved quality of life for their offspring, better consumer decision making, and more hobbies and leisure activities (Institute for Higher Education Policy, 1998).

According to a report published by the Carnegie Foundation, non-monetary individual benefits of higher education include the tendency for postsecondary students to become more open-minded, more cultured, more rational, more consistent and less authoritarian; these benefits are also passed along to succeeding generations (Rowley and Hurtado, 2002). Additionally, college attendance has been shown to "decrease prejudice, enhance knowledge of world affairs and enhance social status" while increasing economic and job security for those who earn bachelor's degrees (Ibid.)

Higher education does open your mind to many different things. From my experience alone, I am able to save more money each month while working as a college graduate. In between college graduation and finding my first job, my paychecks were barely covering my living expenses. As a result, my budget was tight and my extracurricular activities were very limited. Currently, as a college graduate, I have more freedom to do the things that I love and I continually make informed decisions everyday. Knowledge really is power!

If you would like to view the Eric Digest article by Kathleen Porter, download the pdf version of the Value of a College Degree article here

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