Different Takes on the Value of a College Degree
There’s been a lot of flap lately about the perceived versus actual, measurable value of a college education. On April 26, the president of my alma mater, Christopher Eisgruber of Princeton University, published an opinion piece in the Washington Post.
Titled "A college degree is worth the cost — and then some" it tackles recent U.S. polling data that frames the perceived value of a college degree. Then it reviews the numbers that show the impact of a college degree on lifetime earnings. It seems that there’s a serious mismatch abrew right now. Permit me to explain ...
Survey Says ...
Citing a recent Wall Street Journal survey (which also involved an independent research group at the University of Chicago), Eisgruber reports that "56 percent of Americans today don’t think a college degree is 'worth the cost.' " This is up from 40 percent 10 years ago, which means that this negative view of the value of a college education is rising.
It's not just a fringe view, either: A majority of Americans now feel this way. Eisgruber goes on to explain some of the possible reasons for this mismatch, some of which come from overstating current or upfront costs versus long-term payoffs in years to come.
I get that, completely. My 19-year-old son is attending college in Boston right now at a top 10 film school in the heart of downtown. It's expensive, and prices just went up by 4 percent from 2022-2023 to 2023-2024. Ouch!
Figuring the Net Future Value
There’s another story on this same topic that I saw last week, from the April 3 issue of The Economist ("Was your degree really worth it?"). Apparently, lots of people are chewing over this topic these days.
Both articles, however, arrive at the same point. As Eisgruber states in his Post piece: "(A)ccording to repeated analyses by economists at the Federal Reserve Bank of New York, a four-year degree generates an annual return of 14 percent over a 40-year career.
For the benefit of those who don’t already know about the "rule of 72s" let me explain it to you. If you divide 72 by the annual rate of return on an investment, then you get a number that tells you how long it takes your money to double at that rate.
Thus, an 8 percent return means your money doubles every nine years (72/8=9). If you divide 72 by 14, you get 5.14. That means your money doubles every 62 months at that rate. I’d be gobsmacked to get that kind of return on my investments even for just one year (as would most people).
Earning a Degree Is Still Worthwhile
Even with the cost of education up, the lifetime impact of a degree remains one of the best things that people (or their families) can do to help ensure the brightest possible future, and the best overall lifetime earnings. For many in IT, this contrasts with the potential impact on earnings of getting a certification.
(There is, of course, value either way. More on this in a moment.)
IT certification is definitely helpful in getting people employed, and it's may be more impactful than a degree in a proverbial "wasted subject" such as basket weaving or art history. (Check out this story from PrepScholar on the "16 Worst College Majors" for more examples.)
IT certification has not been shown, however, to have anywhere near as profound an impact on lifetime earnings and achievement as a college degree. I’m on record for nearly 30 years now as saying that the answer to the question "Which is better: an IT certification or college degree?" is "Both!" I don’t see any reason to be changing things up, especially in light of this recent coverage.
Make sure that you and your offspring are computer-literate. Heck, everybody should earn CompTIA's "holy trinity" of foundational certs — A+, Network+, Security+ — before they graduate high school. Certification, however, is still no substitute for a college education — especially when it comes to earning power. 'Nuff said.