June 11, 2013
The debate surrounding whether a college degree leads to sufficiently higher earnings to make up for the cost of education has been a widespread and longstanding one. But what about those students who leave before actually earning said degree? Is college still worth it for dropouts? A new study from The Hamilton Project indicates the answer is yes.
The new report suggests that college dropouts make an average of $8,000 more each year than high school graduates without any college, or about $100,000 more in lifetime earnings, even after accounting for the costs of their unfinished educations, notes The Washington Post. In fact, the return on investment for college dropouts exceeds the returns associated with investing in stocks, bonds or a home.
"The annual rate of return of an investment in some college was 9.1 percent," said authors Michael Greenstone and Adam Looney, as reported in The Deseret News. "This rate of return is more than 3 percentage points higher than the average stock market returns and 7 percentage points higher than the returns from investing in Treasury bonds."
The Hamilton Project's report also indicated that employment opportunities were stronger for individuals who had completed any amount of higher education. The report cited the Bureau of Labor Statistics' findings that the unemployment rate for people age 25 and older without a high school diploma was 11.4 percent in April 2013, while for high school graduates in that same age group, the unemployment rate was 7.2 percent. Individuals who earned an associate degree had an unemployment rate of 5.0 percent, and bachelor's degree recipients had an unemployment rate of 3.6 percent. While these statistics are generally consistent with past years, what surprised the Hamilton Project's researchers was the fact that the unemployment rate for individuals in the same age group with a high school diploma and only some college was 6.6 percent, below the national average and the unemployment rate for high school graduates.
"Of course, the high rate of return associated with attending a few years of college does not imply that dropping out of college is a better option compared to completing a bachelor's or associate's degree. Graduates with a bachelor's degree annually make about $32,000 more than individuals with only some college," the Hamilton Project's researchers noted. Furthermore, college graduates still make about $500,000 more over their lifetime than do high school graduates without any college education.
Washington Monthly suggests that there could be a number of reasons for why college dropouts earn more and have more job opportunities than do high school graduates. For example, taking even a few college courses may help to enhance skills in the job market, especially when those courses are related to a practical field like automotive repair. Another reason dropouts may earn more could be that attending college is often perceived as a reflection of social class and intellectual capability, especially since successful minds like Bill Gates and Steve Jobs dropped out themselves.
The Hamilton Project's findings may cast new light on the aforementioned debate about whether a college degree is worth it. Many opinions on this issue have been tossed back and forth, along with grim data on student debt and employment struggles. The Deseret News reports that student loan defaults are on the rise with $3.5 billion in government and private loans defaulting in the first three months of 2013. Last year, President Reagan's former Secretary of Education William Bennett published a book called "Is College Worth It?," which concluded that it if students complete their degree, attend a well-regarded school, and major in a science, technology, engineering or math (STEM) field, it is.
The report is the latest from The Hamilton Project, which investigates the relationship between educational attainment and earnings. The Hamilton Project is a part of the Brookings Institute.
Compiled by Aimee Hosler
"College Dropout Earn Less Than Graduates, But Still More Than Those Who Never Went to College," washingtonmonthly.com, June 11, 2013, David Luzer
"Going to college is worth it, even if you drop out," washingtonpost.com, June 10, 2013, Dylan Matthews
"Is Starting College and Not Finishing Really That Bad?" hamiltonproject.org, June, 2013, Michael Greenstone, Adam Looney
"Valuing a dropout: Going to college and not finishing still worth it, study says," deseretnews.com, June 10, 2013, Devon Merling