After graduating high school, young adults around the United States are left to make an important decision. They must figure out if they will pursue a college degree immediately, do it later, or not do it at all. Commonly, people decide to go to a post-secondary institution. The reason why is the fact that they believe the long-term benefit of doing so is greater than the short-term cost. In reality, however, everyone will have to invest a different amount of money and time into their education. So, how can someone come up with an objective way to put a quantifiable value on their education?
The Concept of Opportunity Cost
According to a high school teacher Peter Russo, something called “opportunity cost” is the main driver of someone’s educational worth. For those unfamiliar, this concept represents the value of the next alternative that would have taken place. So, for example, if a person declines a job that pays $30,000 a year to go to college, their opportunity cost is $30,000. In other words, they are giving up a certain amount of money to do something else.
Well, this is why everyone’s value of education is going to differ. For instance, while some people may have many opportunities to enter the workforce immediately after high school, a lot of others do not. Thus, individuals who have nothing else to do but go to college will have a neglectable opportunity cost. So, one must think about what they would be doing if they are not pursuing higher education to understand what the value of their degree.
Understanding the Data
Research indicates that individuals who obtain a bachelor’s degree will earn approximately 62 percent more than people who only graduate from high school. Even though there are a lot of outliers to this concept, the general pattern where people who have a college degree earn more is true. Of course, it is not quite that simple. For instance, not every major will have the same job opportunities and salary expectations.
Accounting graduates, per se, often have to pursue a master’s degree to qualify for the CPA exam. Meaning, they are immediately going to have a 23-percent higher starting salary, but also be required to invest additional time and money before this benefit. Others, however, could enter their specific industry with only an associate’s degree. So, the second important factor boils down to understanding how long-term data correlates to one’s specific major and career path.
Going to college to obtain a degree that will make one eligible for a six-figure salary is futile absent job opportunities. For instance, a person who is studying to be a mechanical engineer will have a lot more options than someone who is pursuing fine arts. Why? Well, the current unemployment rate for those who are majoring in fine arts is almost 12 percent.
To provide a frame of reference, the national unemployment rate is below 4 percent. Thus, people with this degree will have much more difficulty landing their dream job after graduation. So, when conducting a cost-to-benefit analysis, they must take the low number of opportunities into account. Doing so will help prepare them for the future where they may face unemployment for an extended period.
A Degree Is Not the Only Tangible Outcome!
Many students fail to realize that going to college is not only about getting a degree. Although that is the ultimate and most important objective, there are some other beneficial byproducts. For instance, college life teaches one a lot about independence, time management, organization, and much more. Since all of those are transferrable skills, people can continue using them even if they never make it to their degree. Thus, the number of important life lessons that students learn while in college should be included in the cumulative value of their education.
In the end, Peter Russo points out that people must figure out what their value of educations is based on their set of circumstances. After all, someone who has a full-time job, family, and must pay premium tuition and fees will not be very incentivized to pursue a degree. On the other hand, people who are just finishing their high school and have no significant alternative to higher education are going to value this opportunity much more.