The Relative Value of College Education
The relative value of a college education for recent graduates has been a topic of continuing discussion. The main topic of discussion has been whether people who attend college have any comparative labor benefits over people who did not enroll in and complete college. Textbooks, magazine articles, blog entries, and even the Bureau of Labor Statistics have all written about this subject. Depending on the kind of college, admission to any institution of higher learning needs payment of fees. Some institutions have comparatively higher fees than others, and they place this discrepancy attributable to how well-regarded the education is. According Oldham (2016), many students rely on loans to pay their college fees and this fact has pushed student loan a notch higher, making repayment a nightmare of its kind. Most of students in colleges usually expect or hope that once they complete their college education they will get well-paying jobs (Selingo, 2015). Even those who pay fees for those students usually have enthusiasm that the returns they will get once the students get jobs surpasses their investment in the education. As early as in A-level, children are encouraged to work hard in school so that they join colleges, preferably the ones with big names, so that they get good and well-paying jobs thereafter. From this outlook the following question arises: Does the benefit of college education outweigh the costs? Do college graduates have a comparative advantage over non-college graduates? Although the results are variable, there is a clear indication that college education may be worth the costs.
Objectives
This research attempts to establish whether the benefits of college education outweigh the costs. And whether those with college degrees fare comparatively better than non-college graduates.
Methods
This paper is a report on magazine and journal articles, statistics from the Bureau of Labor, and individual case reports on the relative worthiness of college. The research data is obtained from the previously conducted statistical survey, books and magazines, articles and journals.
Findings and Observations
Research data on the relative benefits of college education, vis-à-vis impending costs shows that the perceptions on the topic is variable. There are those who strongly say that college education is worth the cost, while the others say that the cost outweighs the benefits. A fairly recent study conducted by Gallup and Purdue is one of the exploratory surveys conducted between 2006 and 2015 on the topic. The Gallup and Purdue study is an opinion poll with over 30,000 alumni. According to this poll, it was found that some of college graduates agreed that their education was worth the cost (Beaudry, Green & Sand, 2016). Recent graduates were less enthusiastic than older graduates, but only the recent graduates who took out more than $50,000 in loans were unlikely to agree that their degrees were worth what they had paid for their college education. The graduates in the national online survey were asked to rate on a 1-to-5 scale whether their educations were worth the cost, with 1 meaning "strongly disagree" and 5 "strongly agree disagree" Nationally, 77% agreed, answering with a "4" (27%) or a "5" (50%). 65% agreed their educations were worth the cost, with 27% choosing "4" and 38% responding with a "5."
Analysis from the Journal of Labor Economics
Analysis from the journal of labor economics shows that the demand for skills and cognitive learning in college education has gone down compared to the recent years, according to Beaudry, Green, & Sand (2016). This is due to uncertainties and lack of guarantee that after college education the graduates will secure a good job that will have good returns for their investment. About 38 percent of students who have graduated from college in the past decade strongly agree that their higher education was worth the cost, according to Beaudry et al. (2016). However, a considerable percentage have no conviction that the returns they get are really worth the amount they spent on college education.
Job Market for College Graduates
Quite a number of college students study via scholarships and loans. These loans have to be repaid with interest once they get their jobs. As they look as their monthly salaries, say for instance $400 and the initial expenses they have, most of them find it that the cost incurred during their college education is much more than what they can get in a decade (Leonhardt, 2014). That when the question of "was my degree worth it" comes up.
The survey by pollster Gallup and Purdue University, among those who graduated between 2006 and 2015, some 65% agreed their educations were worth the cost. Among those, only 38% strongly agreed, with the rest falling in the other ranges of the scale. The reduced conviction among recent graduates is hardly surprising. Those graduates emerged with more debt and poorer employment prospects due to a struggling economy. As the debt gets paid off and their earnings rise, they may have a change of heart and start appreciating the cost of education they incurred. Therefore, the take of those graduates is greatly influenced by the earning disparities and the economic climate they get once they get out of colleges.
For many of those with newly introduced bachelor's degrees, the job market for them is still not established. The rates of unemployment for recent college graduates has stuck around 9% and nearly half of college graduates in their 20s are underemployed, meaning the jobs they have don't require a bachelor's degree (Beaudry, et al., 2016). The name of the college you have undertaken your education at has a little influence on the graduate's job prospects. In some cases, the name of the college gives the employer an expectation of the kind of person he/she will be dealing with if they understand the standards of that particular college.
Discussion based on Economic Concepts
Scarcity of resources based on college education corresponds to inadequate jobs available in the market to absorb many graduates that come out of colleges every year. This is clearly evident due to unemployment rates and even cases of underemployment and those that are in the fields different from what they did in college. A good example is a graduate who did a bachelor's degree in engineering and is working in a bank as a teller. With that, the graduate has to make choices in order to survive the harsh environments for those who are not lucky to get well-paying jobs in their field. Some consider venturing into business and entrepreneurship as early as they get out of colleges. The cost for this forgone alternative is called opportunity cost.
The presence of many job seekers who have graduated from colleges poses a competition in the job market since the employers will have to pick just a few from many graduates who apply for the jobs. This gives employers an advantage to weigh out the potentials among the graduates and only pick the best-suited candidates; those that have the package the employers want in terms of skills and experience. Some candidates may agree to offer voluntary services in order to gain experience or agree to work with less payment as interns so that the employers consider employing them. This gives them a comparative advantage as they can offer services at a lower payment compared to others.
The concept of supply and demand features in this set up as the demand for jobs by graduates is very high yet the available jobs are scarce. Price signal is an information conveyed to the consumers and producers via prices charged on goods and services providing a signal to increase or decrease supply and demand (Khatib, 2013). If the price charged is too high, it will mean the demand goes down whereas supply increases. In the college education setup analysis, this relates to an increase in the payments by the employers. High returns obviously attract many people to apply for the position. Similarly, if the job offers very little payment, most of the graduates will not go for it and they may even opt to work in a different field.
Every year, thousands of fresh graduates get released, the number of jobseekers is added in the job market. If we look back, say, two decades ago, the number of jobseekers was comparatively minimal. A bigger percentage of graduates were absorbed relatively easier and those who remained jobless were very few. Following the increase of fresh graduates every year, the number of jobseekers continues to increase and at some point, less than 10% of those who will graduate from colleges will directly get jobs. This means at that point, people will be coming out of college to find almost zero chances to get employed. This can be related to the law of diminishing returns in economics. This concept may also be looked at in another way. Some employers may consider training fresh graduates so as to make them conversant with the working environment and help them gain necessary skills. If the number of employees/trainees keeps on increasing, the marginal productivity of the incoming employees becomes almost zero.
The income distribution concept of economics relates to the disparity in incomes for people from their investments and their salaries/wages. Let's take the case of employees. No employee is paid exactly the same amount like the other. The variation of people's earnings brings about income distribution amongst them.
Some students after graduating may decide to bring together their resources and skills to start a business to provide goods and services to the people. This investment in itself has many concepts of economics that we can look at. For instance, they can plan to provide products that are not offered by the existing market. This can put such a business as a monopoly since it will control the prices for its products. They can register their business as a partnership or a company.
Conclusion
From the above analysis, it is seen that not all college graduates get returns for the amount invested in their college education. Some get well-paying jobs and get good returns within a short while. Some get good jobs after some years. Some get into other fields that are different from what they have studied in college and get good payments from those fields. Even some of the people that never went to college do very well where they are employed and get good payments. Therefore the question of whether college education is worth its cost is rather opinionative. Different people will opine differently on the subject matter based on their personal and collective experiences, which will aid the general understanding of the scope and nature of the career. These days young people are being encouraged have a drive to venture into self-employment and create jobs rather than undertaking college education in the hope of getting employed thereafter. This way, the relative worthiness of college education is still emphasized.
References
Beaudry, P., Green, D. A., & Sand, B. M. (2016). The great reversal in the demand for skill and cognitive tasks. Journal of Labor Economics, 34(S1), S199-S247.
Leonhardt, D. (2014). Is college worth it? Clearly, new data say. The New York Times, 5(27), 14.
Oldham, C. (2016). Student loan debt: Is college tuition worth the cost? Huffington Post. Accessed on April 10, 2017, from http://www.huffingtonpost.com/gobankingrates/student-loan-debt-is-coll_b_10337216.html
Selingo, J.J. (2015). Is college education worth the cost? Many recent graduates don’t think see. The Washington Posts. Accessed on April 16, 2017, from https://www.washingtonpost.com/news/grade-point/wp/2015/09/30/is-college-worth-the-cost-many-recent-graduates-dont-think-so/?utm_term=.f85dbc6b1cbc
