Do you want to skip college? Not if you want to earn more money | Business

Are you skeptical about a four-year college degree? Still, it is better to earn money.

Opposition to college as a general step on the path to adulthood has increased over the past decade. Critics say a four-year bachelor’s degree program puts most students in five-figure debt with no clear path from class to career.

Almost half (46%) of all families surveyed by Gallup for the Carnegie Foundation in New York City in November and December 2020 are alternatives to four-year-olds for children, even without financial barriers. He said he wanted to participate.

However, when comparing the value of a four-year degree with other qualifications (high school diploma, certificate program, associate degree), workers still have an advantage in the labor market and increase on average their income for life. ..

A bachelor’s degree is generally a good investment

According to the Federal Reserve Bank of New York, if a college degree is an investment, that’s a good thing. The typical annual rate of return for a four-year bachelor’s degree is around 14%, well above the threshold for a “good” rate of return for stocks (around 7%) and fixed income (3%). ).

According to 2019 data from the Federal Reserve Bank of New York, bachelor’s graduates receive about $ 45,000 per year for high school diplomas, compared to about $ 78,000 per year on average in dollars. Earn dollars.

However, “on average” does not mean that education rewards or college income bonuses are always profitable. Where do you go to school, how much you borrow, what you study and where you live after school all help you decide when to go home. Many of these factors are influenced by race, ethnicity and gender.

Your ability to repay your debts affects the value of your degree

Student loan debt is hard to avoid and even harder to pay off. According to federal data, college costs increased 117% between 1985-1986 and 2018-19. Meanwhile, according to the Federal Reserve in St. Louis, wages have not kept pace, increasing only 19% over the same period.

However, loans remain the primary means for low-income families to obtain a college degree. For your degree to be worthy of it, you must earn enough income to justify it. That means you have debt that won’t let you fall underwater – manageable student loan payments are about 10% of your after-tax discretionary income.

Obtaining a diploma is very important to get the best returns and to be able to pay off your debt. Many defaulting borrowers are in debt but do not have a degree.

“This is the worst case scenario. Some of these costs are incurred, but with little benefit, ”said Jonathan Rothwell, senior economist at Gallup.

The demand for your major problem

What you study in school affects the types of jobs you can get, your income, and your ability to pay off debt.

According to the 2015 Georgetown data report, average mid-career hires earn a bachelor’s degree in science, technology, engineering, math or STEM ($ 76,000), business ($ 67,000), health ($ 65,000) , and more. It is the highest among those who have acquired. University education center and workforce.

In the same report, the median income of mid-career hires among those whose bachelor’s degree was in fields such as the arts, humanities, liberal arts ($ 51,000), and educational and service roles such as the social work ($ 46,000). It turns out that the value is the lowest.

Use the Department of Education’s College Scorecard tool to estimate each school’s income, graduation rates, typical student debt burden, and other factors. You can search and compare income and liabilities by research area.

The place to live after graduation is also important

Thomas B, a nonprofit conservative think tank. According to the Fordham Institute’s May 2020 survey, where you live after you graduate also affects its value.

“In general, a college degree is a good investment, but the rewards from an international regional perspective are staggering,” said John Winters, associate professor at Iowa State University who conducted the study.

In cities, high school graduates bring in an average of $ 95,229. This is a premium of 86.2% over workers with a high school diploma and 55.7% over those with an associate’s degree.

According to Winters, this is mainly due to the concentration of work in cities, like tech, finance, and marketing, where workers often require a four-year bachelor’s degree. Workers in these fields earn higher wages, resulting in a higher return on investment for their degree.

However, Winters’ results also mean that a four-year degree is less important if you want to live in a smaller region or metropolitan area. The average income for a non-urban bachelor is $ 67,893, with a 46.4% premium over a high school graduate and a 29.6% premium over a high school graduate. ‘an associate’s degree.

The baccalaureate does not guarantee fairness

In a sense, college degrees can exacerbate income and racial inequalities, like student debt and the ability to repay it, said the Center for American Progress, a public policy research organization and senior policy analyst. List, said Marshall Anthony Jr.

“College degrees don’t usually work the same for everyone,” says Anthony.

Black borrowers are more likely to take on more debt than white borrowers, on average about $ 25,000 more, according to federal data.

In 2016, among those with a bachelor’s degree or above, full-time Asian workers aged 25 to 34 had a higher median annual salary ($ 69,100) than their white peers ($ 54,700). Increasingly higher median income for both racial / ethnic groups According to the latest data obtained by the National Center for Education Statistics, it was higher than its peers among blacks ($ 49,400) and Hispanics ($ 49,300) .

According to a 2016 Brookings Institution survey, black borrowers earn more interest over time. Four years after graduating from college, black graduates are $ 28,006 for white graduates, while student debt is $ 52,726.