Most of us know that people with college degrees make more money over their lifetimes than those with just a high school diploma. More often than not, college is seen as a costly yet necessary step for a successful future. Yet does the degree really outweigh the cost?
College is one of the biggest expenses for many families with huge implications if it doesn’t pay. In his new book, “Will College Pay Off? A Guide to the Most Important Financial Decision You’ll Ever Make”, Peter Cappelli, professor of management at the University of Pennsylvania’s Wharton School, offers guidance on how families can make the right college decision for them.
If parents and their children decide that college is the right choice for them in the first place (it’s not for everyone), the focus should then shift to what type of education makes sense and if that degree will have a good return on investment.
Cappelli says employers put more importance on the “growing up” that takes place in college rather than the specific lessons and content absorbed in the classroom. Hiring managers aren’t reviewing your transcript and counting how many A’s and B’s you got. A recent survey of employers conducted by The National Association of Colleges and Employers, asked what specific skills and abilities employers were looking for in new hires, internships in the chosen field, other types of work experience, college major, volunteer work, and extracurricular activities were all included in their response. In the NACE study, an overwhelming majority of employers surveyed said they prefer hiring candidates with “relevant work experience.”
Cappelli also debunks some major myths about college to help guide students and their parents in committing to this huge expense.
Myth: Students can’t go wrong if they study any of STEM fields (science, technology, engineering, and mathematics). Cappelli says that the job market for science and math majors is not particularly strong right now. He says that engineering is where the jobs are, but the problem with engineering degrees is that they are broad and varied. The hottest job at the moment is petroleum engineering, but it’s hard to predict what field of engineering will be hot the year you graduate. Cappelli suggests that instead of picking career paths that are highly in demand at the moment – what Cappelli calls “boom and bust jobs” – early on, students should initially focus on a broader education and once closer to graduation they should choose a major based on their abilities and interests after college.
Myth: Always go to the most selective school he or she can get into. Of course parents want bragging rights to be able to say that their child got into a top-notch school, but Cappelli says the name on your diploma doesn’t matter much. A recent survey by researchers at CollegeMeasures.org looked at earnings of graduates from selective colleges in five states, and found that there was a modest difference in earnings between graduates of the most selective schools compared to those of schools in the middle range. Another surprising finding was that depending on one’s major, two-year community college degrees paid more than the average four-year degree. For example, recent grads with a two-year associate’s degree in nuclear power technology earn just under $100,000, and those in fire prevention and services can earn close to $90,000.
Myth: Public universities are always a better deal than private four-year colleges. Tuition at state universities have increased by 330% since 1983, while tuition at private colleges has increased 250%, according to The College Board, Annual Survey of Colleges study. But private schools have gone to great lengths to draw students in with financial aid, which makes college more affordable. Cappelli says state schools are typically less generous with financial aid than private schools. And what’s more, state colleges charge twice or three times as much in tuition costs for out-of-state students as they do for in-state ones.
A priority for parents when researching schools is getting to the question of: Will my child graduate on time? According to a study done by the National Center for Education Statistics only 40% of full-time students graduate on time and 60% make it out in six years. Any extra time getting a degree means more paid in tuition and more student loans. Cappelli says many traditional four-year private colleges have special programs geared to freshman to help graduate them on time.
To see tuition costs for any college in the U.S., check out the Department of Education’s College Navigator.
To calculate the odds of graduating on time, check out the Higher Education Research Institute
Myth: Employers want to hire graduates with specialized degrees. Cappelli says colleges are trying to encourage students to choose majors that sound like job titles – for instance, “Health Care Records Administration” or “Casino Construction Management.” But you risk limiting yourself to a very specific set of employers with a degree like that. If no one is hiring in those fields, it’s extremely difficult to move around. If the casino construction industry is down the year you graduate, you may not have good options – and you might as well have graduated with a broader, liberal arts degree.
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