College graduates earned significantly more in 2008 than their less-educated peers and also liked their jobs more, but significant disparities remain along racial and ethnic lines in terms of who gets into college, who graduates and the size of the salaries that graduates command upon graduation.
Such are among the key findings of a new College Board report released today titled Education Pays 2010: The Benefits of Higher Education for Individuals and Society.
The report delves into more than just the financial rewards of holding a college degree in today’s economy, showing, for instance, how college graduates were less likely to smoke or be obese than high school graduates; how they vote and volunteer more; are more satisfied with their jobs; and how their children enter school more academically prepared than the children of lesser-educated parents.
But the report is primarily meant to serve as a resource for those who give advice to others — particularly America’s youth — on whether going to college makes dollars and sense.
“Clearly, it shows that college does pay off for most people,” the report’s author, Dr. Sandy Baum, senior policy analyst at the College Board, told Diverse. “It pays off for individuals and it pays for society.”
For instance, the report shows that four-year college degree holders earned an average of $55,700 in 2008. That’s $21,900, or roughly 40 percent more than high school graduates earned the same year.
Even individuals with some college fared better than high school graduates, earning 17 percent more, the report shows.
Higher education makes a difference in how much people earn and whether they earn anything at all, the report shows. More specifically, the unemployment rate for high school graduates between age 20 and 24 in the last quarter of 2009 was 2.6 times as high as it was for college graduates, the report states. Better-educated people also paid more taxes and relied less on public assistance, the report notes.
However, not everyone took the report’s findings to mean that there is something inherent about higher education — or the characteristics of the people who acquire it — that brings about such financial rewards.
“The main reason why getting a college degree appears to ‘pay’ is that we have so many college graduates that credentialism has taken hold in much of our labor force,” said George Leef, director of research at the John William Pope Center for Higher Education Policy in Raleigh, N.C. “It is not the case that college graduates are necessarily more capable or productive than someone who just graduated from high school,” but instead that there are fewer good career paths that remain open to individuals who haven’t gotten their degree.”
However, while the report shows that higher education brings financial gains for those who acquire it, the size of those gains follow patterns that are aligned with ethnicity and race.
For instance, the report shows that African-American men with four-year degrees earned an average of $42,500 in 2008, which is roughly the same as the $42,400 earned by White men with a two-year degree.
Hispanic men who had four-year degrees, on the other hand, earned an average of $45,000, still less than the $54,200 earned by White men who had a four-year degree.
“Whether discrimination is at play really isn’t answered by these statistics,” said Larry Griffith, vice president of the United Negro College Fund. He added that a graduate’s given occupation may explain the difference in income, and noted that STEM (science, technology, engineering and mathematics) careers, in which minorities are underrepresented, tend to pay more than careers in social sciences.
“What we know is education pays and it plays a role in how much you earn,” Griffith said.
But therein lies another set of problems: Higher education gets accessed and completed more frequently by White or affluent students than it does by minority students of lesser means.
The report shows that in 2008, White high school graduates enrolled in college within 12 months of graduation at a rate of 70 percent, whereas Hispanics enrolled at a rate of 62 percent and Blacks at 56 percent.
The report also reveals that students from the highest income quintile enrolled in college at a rate of 80 percent, versus 69, 61, 57, and 55 percent for the fourth-, third-, second- and lowest income quintiles, respectively.
Similar patterns exist in terms of college completion. For instance, the report shows, 57 percent of White first-time full-time students who began their bachelor’s degree programs in 2002 earned their degree within six years, versus 46 percent of Hispanic students and 39 percent of Black students.
Griffith, who manages UNCF’s Gates Millennium Scholars Program, says the access and completion rates underscore the importance of initiatives such as the Gates initiative and another program UNCF plans to launch soon that will seek to replicate the knowledge, financial and social capital that more affluent and better-educated parents often use to make the road to and through college easier for their children to travel.
The program will address college savings and college preparedness, among other things.
“That equate the experience that the highest level income students are having,” Griffith said, noting that the new College Board report shows that parental education and income levels also lead to greater access and completion rates.
But the type of institution a student attends also makes a difference.
Of first-time full-time students who began studying for a bachelor’s degree at a four-year institution in 2002, 57 percent earned a bachelor’s within six years, versus 65 percent at private nonprofit colleges, 55 percent at public four-year institutions and 22 percent at private for-profit institutions.
Lauren Asher, president of the Institute for College Access & Success, home of the Project on Student Debt, said the report underscores the importance for students to be savvy consumers and to look at bottom line costs and likely outcomes, including debt and completion levels.
Citing the report’s findings that graduation rates were lowest at for-profit colleges than other types of colleges, and lowest for African-American students at for-profit colleges, Asher said: “This is of particular concern given the high student borrowing levels and high default rates in this sector.”