Three Reasons a College Degree is Still a Worthy Investment

The following was written by Tim Bowman, a senior private wealth advisor in Blue Trust’s Indianapolis, Indiana office.

In recent years, you may have heard others say, “A college degree just isn’t what it used to be.” Why do some people think that? Higher education has faced several criticisms over the past decade including cost, quality, and job placement. However, in this blog, we look at why we think a college degree is still one of your best investments.

Like many industries, technological advancements have impacted higher education in recent years. Some universities have been slow to adopt new technology, while others started offering online classes to working adults in the 1980s, which was a revolutionary idea at the time. The adoption of multiple educational platforms, outside of the traditional on-campus experience, has led to a significant increase in the number of U.S. adults with bachelor’s degrees. According to the U.S. Census Bureau, only 4.6% of U.S. adults had a bachelor’s degree or higher in 1940 compared to 36% by 2019.¹ This change is significant.

An increase in education across the population benefits the entire economy because it’s an investment in human capital. Specifically, education expands literacy and critical thinking, which in turn increases a country’s productivity.²

Educational Options. There are educational alternatives to a college degree. Companies like Google provide professional certificates for people to learn job-ready skills online, and the apprenticeship model is beginning to gain popularity once again in various industries. These alternatives can be a good option for some; however, this training is very specific unlike bachelor’s degree courses, which usually teach broader critical thinking skills. The Bureau of Labor Statistics showed that the average 18-year-old will have 12 different jobs by the age of 50, with multiple career changes.³

Networking. It is often said, “It isn’t what you know, but who you know.” While I do not completely agree with this statement, I do believe that who you know opens opportunities in life but what you know determines whether you will capitalize on those opportunities. Universities are a fantastic place to build your network through the friendships you develop with other students and professors. Most universities have alumni associations and career development centers specifically designed to help build your network and increase your job prospects. Living on campus is another way to increase your sense of community. However, social media and the increased adoption of virtual meetings have increased the ability to build your network, even if you enroll in online classes.

Income. Some people become millionaires from professional sports, playing video games, or winning the lottery. However, the likelihood of this happening to you or me is less than getting hit by lightning. Would you prefer a more certain path to earning an income and building a healthy financial future? The average American worker with a high school diploma earns over $37,000 a year, while those with a bachelor’s degree earn over $60,000 a year!⁴ That difference makes a tremendous impact on one’s ability to save, give, and plan for a secure financial future.

There are some nuances to this earnings data. Certain degrees have a higher earning potential than others. Make sure that your future earnings potential can offset the cost of your education and any corresponding debt. A good rule of thumb is not to borrow more money to earn a degree than what your entry-level salary will pay after graduation.

I would encourage you not to overlook the power of a college degree in today’s job market. For many jobs, a college degree is required before you can even apply to the position. Also, you can’t measure the value of a college degree in dollars only. I believe the relationships, knowledge, and experiences you gain in college can increase personal happiness and life satisfaction far into the future. And yes, it can help increase your 401(k) balance too.

¹U.S. Census Bureau 2019 data. HTTPS://WWW.CENSUS.GOV/
²Economic Policy Institute. HTTPS://WWW.EPI.ORG/PUBLICATION/STATES-EDUCATION-PRODUCTIVITY-GROWTH-FOUNDATIONS/
³U.S. Bureau of Labor Statistics data. HTTPS://DATA.BLS.GOV/SEARCH/QUERY/RESULTS?CX=013738036195919377644%3A6IH0HFRGL50&Q=12.3+JOBS
⁴Indeed. HTTPS://WWW.INDEED.COM/CAREER-ADVICE/PAY-SALARY/AVERAGE-SALARY-WITH-COLLEGE-DEGREE-VS-WITHOUT