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A college degree is still the best predictor of financial success, but that's not all

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									     A college degree is still the best predictor of financial success, but that’s not all

                  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.
that come out of a college education.”     Virginia, 15.3 percent of people over 25                  45

   The hurdles are financial as well as    have degrees and per-capita income is                     40
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
kid, your odds of going to college are     economic base, then knowledge is the                      20
extraordinarily high,” Turner notes.       cornerstone.                                              15
Minority students are likely to have          Even with rising tuition levels, col-
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

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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