According to a Pew study, earnings of college grads with no further education have increased 13% since 1984, while earnings of those with advanced degrees have risen 23% in that same time period. For those with professional and doctorate degrees, the numbers jump even higher, to 34%.
This data, however, doesn’t take into account the following two things: 1) These increases don’t reflect the unemployment rate – that is, they only show a pay increase for those graduates who have found work; 2) They don’t take household income into consideration – the higher the socioeconomic status, the greater the chance is that marriage and childbearing has been delayed (i.e. fewer dependents) and the greater the chance for greater gains.
Let’s take a look at monthly household income for a moment: The median adjusted monthly household income of college graduates has gone up $1,300 since 1984. For households headed by someone with an advanced degree, that inflation-adjusted amount is $1,500, and for those with professional or doctorate degrees, it’s skyrocketed to $3,400. For those who have not completed a bachelor’s degree, monthly household income has decreased since 1984.
Here are two additional points:
• The study doesn’t show that higher education has caused financial gain, just the association between the two.
• Since 1984, the percentage of college grads who’ve gone on to complete an advanced degree has only gone up 1% (from 26% in 1984 to 27% in 2009). This amount is statistically insignificant and goes against the belief that a weak economy pushes people into higher education.
While I’m always glad to see evidence that a graduate education pays off, I’m concerned about two omissions in this report.
1. This research doesn’t reflect the increased cost of graduate education since 1984.
2. By talking in terms of averages and aggregates, this research doesn’t reflect the uneven benefits of graduate and professional education. The STEM fields in general are booming. The job market for humanities and law grads has basically crashed.
Before plunking down those tuition dollars or even starting the application process, it behooves you to pursue your dreams with an eye on the top and bottom line and a few of the lines in between. What is your education going to cost you? What are the likely financial benefits?
A graduate education can be a fantastic investment, or burdensome expense. Do the homework and research necessary before spending your hard earned cash or assuming thousands of dollars in debt. You want to arrive on campus with confidence that the return on your tuition dollar and time will be more fantastic than the cost.
By Linda Abraham, president and founder of Accepted.com and co-author of the new, definitive book on MBA admissions, MBA Admission for Smarties: The No-Nonsense Guide to Acceptance at Top Business Schools.