Dropping out of college more costly than staying

Tuesday, August 23rd, 2011 By

Despite questions over the value of college, it may be more costly to drop out than to stay. Image from Wikimedia Commons.

There has been a lot of talk lately about whether young people should bother going to college with a bad economy and few jobs available. Though it may seem a worthy debate on the surface, students might be better off staying in college than dropping out to face the job market.

Value of education under fire

With the economy being declared all but dead, the value of getting a college education is being called into question by a lot of people. Earlier this year, founder of PayPal Peter Thiel controversially offered up to 24 people a $100,000 fellowship to drop out of college for two years, according to NPR, and start their own companies. Thiel said it was to challenge popular notions about how much good college actually did for people and to show that relying too heavily on higher education would “stifle innovation.” Innovation is a concept that can’t be measured, and anyone familiar with the history of science or business knows that most innovations are done “on the shoulders of geniuses” as Isaac Newton said. However, things like student debt, unemployment and levels of compensation can be measured.

More jobs and better pay

According to Daily Finance, the U.S. Census found that workers with a Bachelor’s degree or higher earned 40 percent more than peers with less than a bachelor’s degree. The U.S. Bureau of Labor Statistics reports that in 2009, workers with a Bachelor’s or higher had median weekly earnings of $1,137, compared to $726 for those with some college or an Associate’s degree. High school graduates had median earnings of $626, and high school dropouts had median weekly earnings of $454. Unemployment is also lower for graduates. The Bureau of Labor statistics found college graduates had an unemployment rate of 4.3 percent in July of 2011, seasonally adjusted. Those with some college or an Associates had an unemployment rate of 8.3 percent, high school grads faced a 9.3 percent unemployment rate, and those with less than a high school diploma had a 15 percent unemployment rate. Furthermore, an American Institutes for┬áResearch study found that 500,000 dropouts from a group of 1.1 million incoming freshmen cost the nation $4.5 billion in lost wages, spending and tax revenues from 2002 to 2008, according to Huffington Post.

Stay put once in

Students are better off knuckling down and graduating if they enter college. Student loan debt cannot be discharged in bankruptcy, except in some cases. The average student loan debt for graduates with a Bachelor’s, according to FinAid.org, was $23,186 for the class of 2007-2008 and 65.6 percent of those graduates left school with loan debt. It is not the case that no one who doesn’t go to college can’t have a good career. Dropouts can do brilliantly well, like Peter Thiel, Bill Gates or Mark Zuckerberg all have. However, getting a Bachelor’s degree increases the likelihood of getting a job with better pay than not having one.

Sources

NPR

Daily Finance

Bureau of Labor Statistics Unemployment by Educational attainment

Bureau of Labor Statistics median weekly earnings by Education

Huffington Post

FinAid

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