With rising unemployment rates and job uncertainty issues in the headlines, many people are re-evaluating their personal goals and their family’s financial goals. Part of the process should include an examination of their educational priorities. Education has a direct relationship with personal income, and higher incomes tend to equal greater family self-sufficiency.
Oftentimes, people who have been laid off or are having trouble finding jobs will use it as an opportunity to return to college to improve their financial futures. Recent data from the U.S. Census Bureau outlines the substantial value of a college education. For example, workers 18 and over with a bachelor’s degree earn an average of $51,206 annually, compared with those with a high school diploma earning $27,915. The additional income yielded from a bachelor’s degree amounts to about $1 million in earnings over a lifetime, yielding a net return of 12% annually—over and above inflation.
The gains are even greater for those with additional education. Workers with an advanced degree, such as masters or PhD, earn an average of $74,602. Those with a professional degree (MD, JD, DDS or DVM) increased to an average of $99,300. At the same time, those without a high school diploma earn only $18,700 annually. People with a college education tend to have significantly lower rates of unemployment than those with only a high school education. And high school dropouts are even less likely than high school graduates to work fulltime and maintain steady employment.
College graduates also tend to have greater career options, better promotion opportunities, and greater access to benefit packages such as health care and retirement plans. Obviously, going to college does not guarantee that all workers will find their dream jobs. It also does ensure that the typical Oklahoma college graduate will earn those wages in our state. But it does provide them similar advantages over those without a college education and help prepare them for greater financial stability throughout their lives.
Increased college graduation rates also tend to improve economic well-being of communities where individuals work and live. Some of these societal benefits include lower crime rates, greater and more informed civic participation, and improved performance in numerous other socioeconomic measures. These gains help increase property values, decrease the demand for government services and serve as recruiting tools to attract new employers and businesses to the area.
In addition, college graduates tend to increase productivity and profitability for their employers, which translates into increased tax benefits for the state and local communities. Including the combined individual and societal benefits, the value of a college education has an annual rate of return exceeding 16%. Recent studies indicate that to reach the annual national average, Oklahoma needs about 12,000 more high school graduates, 24,000 more people with associate’s degrees, 26,000 more with bachelor’s degrees, and 24,000 more with advanced degrees. In fact, the state rates near the bottom in college graduate rates per capita. As a result, the economic and financial future of our state and our families may be limited.
While a person’s academic ability has an impact on his/her educational attainment, studies show that a child’s ability is shaped by a variety of family and environmental factors such as the values and goals of their family. In addition, a child’s educational attainment is strongly influenced by the educational attainment of his/her parents.
The bottom line is this: investing in your education is an investment in yourself, your family and your child’s future, and the benefits can reach far beyond the immediate gain.
Sue Lynn Sasser, PhD, is an associate professor of economics at the University of Central Oklahoma.