A college degree is still the best predictor of financial success, but that’s not all BY BET TY JOYCE NASH W hen Debbie Barr was a despite rising tuition. A college educa- bachelor’s degree by the age of 24 high school senior in tion is pulling in a higher premium compared with 39 percent from the Sophia, W.Va., she hap- than ever to workers’ paychecks. middle-income group and 52 percent pened to bump into a college recruiter Graduates with a four-year degree not from those with the highest income. at lunch. Barr wanted very much to go only make more money than nongrad- Usually, people balance the money to college, but her father had been uates — 62 percent more in 2003 and they’ll spend on college with the time injured in a mining accident, and her 73 percent more over a working life of in forgone earnings and add up what family’s income was next to nothing. 40 years — but they’re also more likely they’ll gain by earning a degree. A spe- She’d written off the idea. to volunteer, give blood, use a library, cial report published by the College Although Barr was an “A” student, and open retirement accounts than Board, “Education Pays,” found that her high school counselor had never nongraduates. They’re healthier (less by the time a graduate is 33, he has mentioned college. “The girls got mar- than 15 percent smoke) and (by some earned enough to make up for tuition ried and had kids,” Barr recalls. “And measures) make better parents. and forgone earnings, if he entered a this was the 1980s.” Her chance meet- Economists continue to study the public, four-year college at age 18. ing with a Concord College effects of going to college, just one Some benefits of postsecondary representative proved fruitful, and institution through which “human education are less quantifiable. For Barr slogged through intimidating capital” is nurtured. They aim to figure example, economists Janet Currie and financial aid forms. She earned out how public resources ought to be Enrico Moretti found that higher her bachelor’s degree in English directed at helping more young people maternal education improves infant Education from Concord, located in enter and finish college. health: “Our results add to the growing Athens, W.Va. body of literature which suggests that “I’m trying to push my niece and Education’s Black Box estimates of the returns to education cousins [to go to college] because it is While more people may be going to which focus only on increases in wages important,” she says. “Wal-Mart can’t college than ever before, completion understate the total return.” support you all your life.” rates have stagnated. A recent study by But the earnings signal is loud and Today, Barr is the lead counselor for the Higher Education Research clear. In 1979, people with a bachelor’s West Virginia’s Talent Search, a feder- Institute at the University of degree or higher earned about 45 per- ally funded effort produced by the California at Los Angeles reports that cent more per hour than high school Higher Education Act of 1965. The among freshmen who entered four- graduates — and that difference has idea is to identify low-income sixth- year colleges in fall 1994, 36.4 percent risen over time. In 2003, the average PHOTOGRAPHY: GETTY IMAGES AND GEEP SCHURMAN graders and track them through high completed a degree within four years, full-time worker in the United States school, making sure they build skills compared to 39.9 percent 10 years with a four-year degree earned and take college prep classes. Along earlier and 46.7 percent in the late $49,900 compared with $30,800 the way, the counselors help with 1960s. The rate of completion rises earned by a high school graduate, inspiration, study habits, financial aid after six years to 61.6 percent. about 62 percent more. Those with forms, and field trips. And income matters. Among poor master’s degrees earned nearly twice as To forgo college is a costly choice, students, an estimated 7 percent earn a much, $59,500, and medicine and law 34 Region Focus • winter 2006 graduates earned almost three times spells out the problem: Poor and are more college graduates — the as much, $95,700, according to minority students go to poorer share of the population with bache- “Education Pays.” schools, receive less in the way of aca- lor’s degrees went from 26 percent in Understanding the relationship demic preparation, and often have no 1996 to 30 percent in 2004 — they between money and education is cen- one to propel them toward college. continue to earn more money, indicat- tral to policy discussions. The “Since they don’t have the experience, ing increased demand. But average question has prompted economists to they don’t know how to take the steps wages of lower-skilled workers have ask whether education is responsible to go to college, how to take the tests, gone up recently too. The authors con- for the added value or whether it’s a which math courses to take — a whole clude that the economic boom of the product of the smart, motivated peo- slew of things, the advantages that late 1990s explains the rise in average ple (who grew up in middle- and largely white middle class has,” he says. wages of all workers. Despite that and upper-income families that make early What a drag. On the economy. the hefty increases in tuition, the and continual investments in educa- Economic research shows that payoff from getting a college tion) who typically finish college and education contributes to productivity, degree continues to outstrip the ever- make more money. adds to personal earnings, and leads mounting costs. to efficiency. People can adjust to The authors calculated the cost The Economic Keystone change in the workplace more quickly, of an education this way: Take Amber Godfrey, a senior at Virginia among other benefits. But sluggish four years of tuition and fees at a Commonwealth University, is the first educational attainment spells trouble. typical university and then add four in her family to attend college. Her “Slower growth of the educational years of lost wages, using average parents, who joined the military to get attainment of the workforce directly annual earnings of a high school the training they needed, have encour- reduces economic growth by slowing graduate. That amounted to about aged her since she was very young. “I growth in labor force ‘quality’ $107,277. According to the study, the have a lot more opportunities having and may have an adverse impact lifetime boost to wages of a college my degree,” she says. “I just know on the rate of technological degree is about $403,000. Subtract that’s what we have to do the way our advance,” writes Harvard economist the cost of college and still wind up world is changing. The minimum Larry Katz. with a benefit of nearly $300,000. requirement is becoming, ‘Do you The connection between economic What’s good for the labor market is have a bachelor’s?’ ” Godfrey, a former performance and education is strong. good for the economy. And today’s high school basketball player and For example, the U.S. Census Bureau labor market requires higher-level “people person,” hopes to work in reports Maryland’s percentage of the skills, says Penn State’s Heller. sports and entertainment as a public population with a bachelor’s degree at “We used to talk about the middle- relations specialist. She just made the 35 percent, more than 8 percent higher class lifestyle,” he says. “You could go cut as a finalist for an internship with than a decade ago. During the same off and get a union job and live that the National Basketball Association. period, total personal income in lifestyle, but more and more those College graduates have better out- Maryland rose by 13 percent, accord- jobs aren’t here anymore. People are comes all the way around. But it’s hard ing to the National Center for Public requiring more training to live that to break inside the black box to figure Policy and Higher Education. And in lifestyle.” out why. Sarah Turner, an economist at South Carolina, where nearly 25 percent the University of Virginia, asks of the over-age-25 population has whether that’s caused by college per a bachelor’s degree, the state’s se. The answer is complicated. “But per-capita income is $27,153, about Population with a College Degree there certainly remains a robust pre- 82 percent of the national average of The connection between education and economic mium for the types of general skills $33.041 — 44th in the nation. In West performance is strong. 50 that come out of a college education.” Virginia, 15.3 percent of people over 25 45 45.7 The hurdles are financial as well as have degrees and per-capita income is 40 35.2 academic. “Now more than ever if you $25,681 — 50th among states. 35 33.1 P ERCENT 30 27.7 are a low-performing, high-income If a region is looking to build a solid 23.4 24.9 25 kid, your odds of going to college are economic base, then knowledge is the 20 15.3 extraordinarily high,” Turner notes. cornerstone. 15 10 Minority students are likely to have Even with rising tuition levels, col- 5 fewer resources, and financial aid sim- lege is still a good deal, according to 0 DC MD NC SC VA WV US ply hasn’t kept up with growth in Lisa Barrow and Cecilia Rouse, NOTE: Data are for 2004. Percent of population 25 years or tuition, according to Donald Heller of authors of the 2005 article “Does older with a bachelor’s degree or higher. Pennsylvania State University’s Center College Still Pay?” published in The SOURCES: U.S. Census Bureau and Postsecondary Education for the Study of Higher Education. He Economists’ Voice. Even though there Opportunity winter 2006 • Region Focus 35 Barriers to Entry Moving the Mountain percent, exceeding the national aver- Many high schools, especially rural Among Fifth District states, the per- age of 56.7 percent. and inner city, just don’t groom stu- centage of college graduates varies “We’re starting to do a good job at dents for college. Stanford University’s widely, with West Virginia’s 15.3 per- the front end, now we have to focus on Bridge Project found that state high cent the lowest. The Mountain State’s the back end, which is retention,” school tests often focus on different low percentage of graduates makes Long says. “Student services, including knowledge and skills than college Debbie Barr’s protégés at Talent intervention once students get on entrance and placement requirements, Search a primo resource. (West campus, with mentors, is the other leaving students in the lurch academi- Virginia’s population is aging with few end of the pendulum.” cally. Guidance counselors are moving in. According to the U.S. overworked by state test require- Census Bureau, by 2025, there will be Lifelong Learning ments, often irrelevant to college nearly 19 percent fewer traditional col- Many students never make it to four- preparation. lege-age students in the state, the year schools. In the 1960s and 1970s, An even bigger problem is that ris- biggest decline in the nation.) in an effort to “democratize” higher ing college costs have left some Educators in the state are working education, public policies expanded students priced out of the market. The hard to send students to college. community colleges. problem is, naturally, worse for low- About 70 percent of West Virginia’s “That did more to access in income kids, arguably the group Talent Search seniors enroll in college, higher education than any other needing education the most. And if according to state coordinator Bob movement over the last 100 years,” they do start, they are unlikely to finish. Long of the West Virginia Higher Heller says. The community colleges “It’s true that more low-income Education Policy Commission. The opened doors especially for minorities students enroll in college now than in search reaches students with family and women. Women today comprise the 1970s — but they are less likely to incomes of less than $12,000 in 74 57 percent of all college students, graduate than their wealthier peers,” schools in 55 counties. and 58 percent of community college writes Ross Douthat in “Does “Historically, all the studies and all students. Meritocracy Work?” in the November the data show even the bright kids of Nearly half, about 46 percent, of 2005 Atlantic Monthly. Fifty-five per- low income do not go to college at undergraduates attend community cent of need-based Pell Grant the same rates as intelligent kids colleges, where the average age is 29. recipients, for example, attended two- from more affluent backgrounds,” Community colleges were designed to year rather than four-year schools in Long says. give students the first two years of 2002, compared to 38 percent in 1974. West Virginia aims to improve its basic studies, after which they’d trans- A 2002 report of the independent college matriculation rate partly by fer to a four-year school to complete a Advisory Committee on Student developing relationships between degree. Ultimately, the mission Financial Assistance, which counsels each stage of schooling: elementary, expanded to vocational training. Congress and the U.S. Secretary of middle, and secondary. The state Typically, community college stu- Education, found that nearly half of jacked up the levels of science and dents are the first in their families qualified high school graduates from math classes so students enter college to attend college. While community poor and moderate-income families in prepared to take college-level courses colleges clearly play a role in human 2002 did not enter four-year colleges without spending half a year in reme- capital accumulation, the student within two years of graduation and 22 dial classes. retention rates can’t match those of percent, 170,000, did not go to college In 2004, West Virginia was rated as four-year schools. at all. a top-performing state in the propor- In a paper published in 1999 in the The report, “Empty Promises: The tions of high school students enrolled Journal of Economic Perspectives, Myth of College Access in America,” in upper-level math, 59 percent, and Thomas Kane and Cecilia Rouse places the number of students who are science, 44 percent, according to found that of all students enrolling in qualified but can’t attend four-year “Measuring Up 2004,” a report by the two-year colleges, more than half don’t schools for financial reasons at National Center for Public Policy and complete any degrees, about 15 per- 400,000. That number isn’t trivial, Higher Education. The state’s Promise cent earn a certificate, another 16 says Heller, who worked on the report. scholarships, funded by lottery pro- percent obtain an associate’s degree, “We know in certain regions, in cer- ceeds, reward students who maintain a and about 16 percent complete a bach- tain labor markets, there are 3.0 average and score 21 or above on elor’s degree. At four-year colleges, shortages,” Heller says. “If we were the ACT. nearly 60 percent complete bachelor’s able to get these students, we’d be able They’re seeing results. Since 1996, degrees. to have much more flexibility in labor college matriculation rates of West The community colleges can markets to ensure we’ve got enough to Virginia high school graduates has respond quickly to demand, though, meet demand of the work force.” risen from about 47 percent to 59.4 especially in economic downtimes. 36 Region Focus • winter 2006 And an associate’s degree holder in Shelley Tattersall is 42. She had hopefully even after college. 2003 earned $37,600 compared to attended a New Jersey community Eligibility criteria vary from state to the $30,800 earned by a high school college in her 20s, but never finished. state and include minimum grade graduate. Enrollment increased She now works at the University point averages and standardized test at community colleges by about of Virginia in administration and scores. In the Fifth District, South 5 percent between 1990 and 2004 as needed education to advance. “I Carolina and West Virginia offer tuition at four-year schools rose. wanted more challenging work and a merit scholarships. Overall, today more older students degree would give me more options,” Problematically, those awards typi- attend postsecondary institutions she says. cally go to higher-income students than traditional-age college students, who would have gone to college any- according to Sondra Stallard, a profes- What to Do? way. Also, state merit scholarships can sor and dean of the School of While the educational premium help with rising tuition costs, but Continuing and Professional Studies seems irrefutable and the argument can’t compensate for poor early at the University of Virginia. that economic growth depends on schooling, a ragged home life, or rock “We’ve had students who left capital, physical and human, remains bottom confidence. because they need to work part-time strong, policy experts differ on the Debbie Barr has been there. She so they don’t incur so much debt,” best way to ramp up educational remembers her fears: “Could I make it? Stallard says. She notes that students attainment. What if I get down here and mess up?” can begin at Piedmont Virginia About 14 states are giving students She did make it through, and her Community College and transfer to merit scholarships. The idea is to nur- case illustrates the myriad benefits the University of Virginia for a lot ture human capital and encourage of an education. “It’s opened up less money. The students in the pro- students to stay in their home states doors for me to give back to my gram typically work full-time. after graduation from high school and community.” RF READINGS Barrow, Lisa, and Cecilia Elena Rouse. “Does College Still Pay?” Kane, Thomas J., and Cecilia Elena Rouse. “The Community The Economists’ Voice, 2005, vol. 2, no. 4, article 3. College: Educating Students at the Margin between College and Work.” Journal of Economic Perspectives, Winter 1999, vol. 13, no. 1, Douthat, Ross. “Does Meritocracy Work?” The Atlantic Monthly, pp. 63-84. November 2005, pp. 120-126. “Empty Promises: The Myth of College Access in America.” A Heckman, James J., and Alan B. Krueger. Inequality in America: Report of the Advisory Committee on Student Financial What Role for Human Capital Policies? Cambridge, Mass: MIT Assistance, June 2002. Press, 2003.
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