I’ve written before about how higher education is the next bubble, and I’m glad that Mark Schneider of AIR has done some research on behalf of AEI to really hit the nail on the head. Here are your talking points, folks:
average lifetime earnings advantage for college graduates is well below the million-dollar figure when forgone wages and the cost of a college education are factored in.
- Incorporating those figures and using the Department of Education’s 2003 Baccalaureate and Beyond Longitudinal Study, Schneider estimated that the lifetime earnings advantage for college graduates ranges from $150,000 to $500,000.
- The differences reflect earnings from open admissions schools to selective private schools.
And of course the premium isn’t consistent across industries or employees:
- The Census Bureau’s 2009 Current Population Survey shows that 20 percent of individuals making less than $20,000 per year have bachelor’s or master’s degrees.
- Recent graduates, age 24 and under, are experiencing a jobless rate of nearly 10 percent.
Even more problematic for future generations is that the gains from college aren’t growing over time.
- In 1991, young workers with bachelor’s degrees earned, on average, 1.48 times the amount that those with only high school diplomas earned.
- Young college graduates’ earnings peaked in 2000 at 1.68 times that of diploma-holders, then declined to 1.54 percent in 2009.
- Keep in mind that the price of tuition increased nearly 300 percent during this same period.
Right now, a bachelor’s degree is still a good option for many students. However, as prices continue to rise and gains in academic achievement and lifetime earnings stagnate, the bubble — the discrepancy between cost and value — will inflate further.
I’m dreading the day when it will burst, though.
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