LOS ANGELES (Reuters) — Some Americans may question whether a college education is still a good value, but a recent study found most young college graduates see their degrees as worthwhile investments.
They have good reason to feel that way. The same Pew Research poll found that the earnings gap between young people with and without college degrees was the widest in nearly 50 years. People with only high school educations were far more likely to be unemployed and to live in poverty than those who had college degrees.
The Pew study, which was released last week, found that 72 per cent of college graduates aged 25 to 32 said their degrees had already paid off, and 17 per cent said they would in the future. Of those who borrowed money to pay for school, 86 per cent said their degrees had paid off or would pay off, according to the report titled The Rising Cost of Not Going to College.
The findings contrast with a previous Pew poll that found Americans questioning whether college was a good value. The survey, taken in 2011, found 57 percent of Americans felt college students received only a fair or poor return on their tuition fees. Yet nearly nine out of 10 of the college-educated respondents said their own degrees had proven to be good values.
Rising costs and soaring student loan debt — the average member of the class of 2012 owes US$29,400, according to the Institute for College Access & Success — have led some to question whether college degrees can still offer a reasonable economic return.
The answer in the most recent Pew study was an overwhelming "yes."
Besides polling millennials ages 25 to 32, Pew analysts used U.S. Census Bureau data to examine previous generations at that age: the Silent Generation in 1965; the early baby boomers in 1979; the late boomers in 1986 and Generation Xers in 1995.
Here is what the Pew researchers found:
• College graduates aged 25 to 32 who were working full-time earned US$17,500 more in 2013 than their counterparts without degrees, the biggest gap in 50 years. In 1965, recent college graduates in the same age range earned just US$7,499 more than high school graduates in today's dollars.
• Inflation-adjusted earnings rose for college graduates to US$45,500 in 2013 from US$38,833 in 1965.
• Full-time employment in 2013 was higher among college graduates aged 25 to 32 (89 per cent) than people without degrees (82 per cent), and unemployment was lower at 3.8 per cent versus 12.2 per cent.
• People without high school degrees are far more likely to be poor now than in the past. The poverty rate of the millennial group (16 per cent) is twice that their baby boomer predecessors in 1979 (8 per cent). Among college graduates, the rate also doubled, to six per cent of millennials from percent of the boomers. But of those with only a high school diploma, 22 per cent live in poverty — three times the seven per cent rate among boomers at the same age.
These statistics hint at a bigger trend: Not only are the college educated doing better than previous generations, but people with only a high school diploma are doing much worse.
"People with only high school educations aren't keeping up," said economist Rick Fry, senior research associate and co-author of the study. "Their earnings have declined."
Median pay for a high school graduate fell to US$28,000 in 2013 from an inflation-adjusted US$31,384 in 1965. High school graduates these days make 62 per cent of the typical college graduate's salary, down from 81 per cent in 1965.
The decline in the value of a high school diploma is so dramatic that it nearly offsets the gains experienced by the better educated in this age group. Overall, millennials earned a median $35,000, compared with an inflation-adjusted US$34,883 for early boomers in 1979 and US$32,173 for Generation Xers in 1995.
Of course, not everyone who fails to get a college degree is doomed to struggle.
"There are still going to be skilled and talented people who will be able to succeed (after high school) without any further education," Fry said. "They're the exceptions."
What about the idea that today's college graduates are doomed to work in jobs that do not utilize their skills? The employed millennials the Pew researchers interviewed did not seem to share that view. About 86 per cent said their jobs were either career positions or stepping stones to them.
"We've heard about how overqualified and underutilized college-educated young adults are," Fry said. "But only 14 per cent said 'this is just a job I'm doing to get by.'"
Fry said one-third of millennials had college degrees, compared with one quarter of early boomers. The U.S. Labor Department estimates that by 2018, 63 per cent of jobs will require at least some college.
"The message about the importance of getting an education is seeping in," Fry said.