Is college worth it? The question once seemed obvious. For decades, young people in rich countries flocked to higher education. Governments touted college as a boon to social mobility and economic growth. Yet as tuition fees rise and graduates’ earnings stagnate, disillusionment is growing. A Wall Street Journal poll published on March 31 found that the crisis of confidence has worsened: 56% of Americans now believe that a degree is no longer worth the time and money.
That’s not true for undergraduates in general, but the stakes of pursuing a degree are certainly rising. In the past, the earnings dividend of a degree has been growing in developed countries. More recently, in many countries, the earnings dividend has stagnated or even declined, while tuition fees have risen. The average value of a degree is still considerable, but in detail, many graduates are not getting the right return on their investment.
Dropping out without a degree is obviously a big loss, and delaying graduation also loses value (because the time spent could have been spent working full-time), both of which are common.
To make more money, choose the right industry. By far, the most lucrative degrees in the United States are engineering, computer science, and business. Degrees in music and visual arts, for example, are not necessarily as promising.
What you study is often more important than where you study it. But beware: No matter how lucrative a major is, a school that ranks at the bottom of the list won’t offer much value to students. There is evidence that choosing a high-paying major just to make more money can backfire.
Men have more reason to worry about their investment in higher education than women because they have more opportunities to make money without studying. In particular, male graduates who do not do well in their studies earn less, so studying is also a risk for them.
What does this new information mean? It signals that the market for higher education is evolving. People are now looking for higher-return options for different stages of education. Colleges are also making changes by cutting back on humanities. Companies are also changing their recruiting to lower the academic requirements for positions. Governments are also taking appropriate measures to adapt to this change.
Some people are still spending. U.S. President Biden announced last year that he would urge the Supreme Court to pass a bill to significantly forgive student loans in the United States and planned to adopt a series of policies, including easing the loan repayment system.
For many people, it is simplistic to focus more on the economic returns of higher education, because many subjects are worth learning in themselves. But students still believe that increasing income is the most important thing. For poor students with loans, the rate of return is of course important. But nowadays, many majors have little gold content. Only by combining information, market laws and policy optimization can this situation be reduced.
