Is college worth the investment?

Many college students, when faced with the immense pressure to commit to attending college and obtaining a bachelor's degree, may be intimidated by the possibility of accumulating student loan debt due to college costs.

However, those who have attended college reap benefits from obtaining their four-year degree, and with the use of financial aid options such as scholarships and grants, the cost of tuition and amount of student debt can be reduced. Ultimately, college is worth the costs.

In this article, we will tackle the data behind the U.S. Department of Education's NCES survey comparing educational attainment and workforce characteristics. We will cull the most important pieces of data from the NCES study and summarize the findings as it relates to your college trajectory.

We will break down the investment in your education utilizing four basic metrics: unemployment rate, labor force participation rate, earnings, and employment to population rate.

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College as an investment

Labor Force Participation Rate

The labor force participation rate is defined as the percentage of people employed or actively seeking work. The correlation drawn from the study is the higher level of educational attainment, the higher the labor force participation rate.

As an example, the cohort of 25- to 64-year-olds with only a high school diploma had a labor force participation composite rate of 68% in 2014 across all ethnicities. At the same time, the same age band who were college graduates with a bachelor's degree averaged an 86% labor force participation rate.

Bottom Line: The greater level of college education puts people to work at a much greater rate than those who do not have a college education.

Unemployment Rate

As defined by the NCES, the unemployment rate reflects the percentage of people not currently employed and who have met specific requirements to find work during the prior four weeks. We will look at two salient statistics relating to unemployment: unemployment rate by education attainment and unemployment rate by age.

During the 2015 study, the findings suggest a 9% unemployment rate for 25- to 64-year-olds with no high school diploma compared to a 2% unemployment rate for the same age group who were college graduates with a bachelor's degree or greater. For the same timeframe, the unemployment rate for the cohort of 20- to 24-year-olds without a high school diploma was 20%.

Bottom Line: The higher level of college education attainment significantly reduces unemployment rates across all ages. Also, younger people without an education have a significantly tougher time finding work.

Employment to Population Ratio

The employment-to-population ratio is basically the percentage of the population that is employed. The results of the study were consistent with the previous data sets reflecting a stark trend relating to higher education. More specifically, the 25- to 34-year-old group who were college graduates with at least a bachelor's degree was noted as having an 85% employment rate compared to 70% with only a high school diploma compared to 57% with no high school diploma.

Bottom Line: Employment rates vary significantly between people with a college degree and those who are high school-only graduates.

Earnings

The earning power of people with a college degree is proven to be significantly greater than people without a college degree. The NCES survey illuminates this fact for both men and women college graduates earn more across the board. In 2014, male college graduates with a bachelor's degree or greater earned 67% more than their counterparts with only a high school diploma. Likewise, female college graduates with a bachelor's degree or greater earned 68% more than their counterparts who only completed their high school diplomas.

Bottom Line: College graduates with a bachelor's degree are more likely to have a well-paying job in the job market than individuals who only have a high school diploma.

Is attending college a good investment?

Ultimately, obtaining a college degree is one of the most instrumental factors high school graduates can take in determining their future. While high school graduates are often intimidated by committing to getting a college degree, it is an important step to make.

College graduates holding a college degree have been found to be better prepared for the workforce, more employable, enjoy greater job stability, and earn significantly more than individuals with only a high school degree. Even obtaining an associate's degree from a community college can make a considerable difference when it comes to the career paths available to you.

If you were asked if investing in college is worth it the answer, based on the data, must be a resounding YES.

For additional resources on this subject see our articles: Complete Guide to the College Admissions Process, Why is College Important?, How to Successfully Transition to College, and How to Prepare for College.

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