If you are looking to get a college degree, the odds are that you’ve been told at least one of several half-truths that could lead you down the path of unemployment,unfulfillment, financial hardship or all of the above.
Keep in mind, these are half-truths, they are not lies. They are not necessarily intentional either. For the most part, there is good data in connection with education and success, but that data is often reported in a pro-college fashion. Thus, some of the risks involved with getting a degree are not really communicated to us. This post is about explaining these risks, not to discourage you from going to college.
“College graduate make more money than high school graduates”
On average, those with college degrees make $20,000 more per year than high school graduates. It is a statistic that has soaked into the psyche of the American workforce. According to a survey by Pew Research, this $20,000 pay differential was widely touted by respondents as reality. However, reporting on average pay is very misleading.
When the media reports average pay, we tend to think our odds of attaining the average is much better than it really is. An average is a measure of central location, which means that an average tells us where the middle of the pack resides. When you hear average pay, instead of thinking “that’s what I’m likely to make; think “I have a one in two chance of getting average pay or better.”
While nearly 50 percent of college graduates will make less than the average pay, one in seven high school graduates earn more than the average pay of those with a bachelors degree. Your odds of a better earning potential certainly increase with a college degree, but they are not a guarantee.
“Don’t think about the cost, just get the degree and the increase in wages will pay for it.”
Smart Money Finance showed how added cost and delayed earnings from college graduates can impact wealth by retirement. Using national averages and a 5% savings rate, the high school graduate could earn nearly three times the nest egg of the college graduate, even though the college graduate always had a higher income.
The damage to your savings potential is worse for those that borrow even more than $30,000 or spend additional years in college. Cost is the most important factor that a prospective student needs to evaluate and should never be downplayed as it often is. If you are interested in finding out if you can afford a college, please see last week’s article.
“All you need is a four-year degree, then you can do whatever you want!”
What college graduate hasn’t heard that one before they dropped $80,000 on a degree and upon graduating, realized that the world worked a bit differently? Once upon a time, only a few people went to college and there was such a need for educated people to fill white collar jobs, that a four-year degree in anything could stretch far in the job market. The reality is that the job market is very competitive and on-the-job training is rare. According to Daily Finance, only 30% of 20-somethings have a career in their chosen field.
Students need to tailor their degree to the job that they want when they graduate and even then it might not be enough; they may also need certifications, advanced degrees and a willingness to move to a new area. If you aren’t focusing on a specific job before you pick your major, you run the risk of having the wrong degree in a world of graduates with the right degree. For example, if you are looking to get a computer and information science degree, you shouldn’t be looking for marketing jobs on the weekends unless you plan to somehow combine to two and make the best of a situation.
Some degrees are over-saturated with students. I’ve known dozens of college educated adults working jobs that could be filled with high school graduates. You’ll need to do some serious research and careful planning to avoid the same fate
“Those with a college degree have a lower level of unemployment”
This half-truth is another product of averages.
Last fall, unemployment for high school graduates was around 10 percent and college graduates 5.1 percent. Thus, the personal finance journalists of the world will conclude that you are likely to have a better change of being employed.
The Department of Education conducted a study that followed college students from their freshman year through to employment. The report showed the unemployment rate for some of the degrees that were attained. Both liberal arts degrees and humanities degrees had over 10 percent unemployment; worse numbers than those with a high school diplomas.
Yes, most people have that have a college degree have a better chance of being employed, but not all degrees are created equal.
The benefits of a college degree should never be overlooked and nothing in this post should dissuade you. Instead, get the full picture and make a smart decision about college.