From Learning to Earning: How Much is a College Education Worth Today?

According to a new U.S. Census Bureau study, education levels had more effect on earnings over a 40-year span in the workforce than any other demographic factor, such as gender, race and Hispanic origin. For example, a worker with a professional degree is expected to make more than a worker with a eighth grade education or lower.

As illustrated in our recent infographic, investing in a college education or graduate school has long been and remains a good way to increase the amount of money you can expect to earn over the course of your working life, but more recent analyses reveal more about how your earning capacity also is influenced by the cards you were dealt at birth: your demographics. The U.S. Census Bureau has been working in recent years to get beyond traditional education-earnings averages to put a specific dollar value on the combined influences of characteristics such as gender, ethnicity and education, for example, in an effort to determine how learning truly translates to earning over a career.

Female high school seniors, for example, statistically start out their working lives tens of thousands of theoretical dollars behind their male peers. Although they may never fully catch up to men, women may need a college degree just to break into the middle class.

These types of multidimensional lifetime earnings estimates may prove to be particularly beneficial to American consumers right now amidst the rising cost of college tuition that has been matched with a rising student-loan burden that now exceeds credit-card debt and may reach $1 trillion before the end of 2011.

It is now more important than ever for prospective college students and their families to consider themselves “consumers” of higher education and analyze carefully their investments in college degrees and credentials by assessing their financial outlays against up-to-date occupational earnings data and managing student-loan debt in the context of other life goals, such as the prospects of home ownership, career breaks for child-rearing, or an early retirement.

Given all the factors relevant to your life and goals, a brand-name school may not be necessary or worth the money—it, further, may not be affordable if you plan to work in modestly compensated occupations such as social services or public education, for example, where a state public university degree is all you really need. For those who want to work in academia, elite schools and the Ivy League have great career value and offer you a chance to network with prestigious intellectuals.

Some high school seniors with specific high-value technological knowledge and other marketable workforce skills, as well as those with the creative potential to become inventors or entrepreneurs, may be quite successful with postsecondary training or apprenticeships other than a four-year baccalaureate degree—or, they may want to spread their coursework and costs over a longer period than four years by attending classes part-time at a community college while working or starting a business.

Here are a few big ideas to keep in mind in looking at how much you want to spend on education:

• There are many important issues prospective college students need to consider—such as expected occupational earnings, the value of a particular college brand-name in a given field, the market value of a major field of study, the prospect of graduate or professional school, and the like—that must be considered in evaluating the costs and benefits of higher education and the level of student-loan debt that is reasonable in any particular circumstance.

• Prospective college and graduate students along with their families should recognize that the road to success may be changing in the United States. That does not mean formal education has lost all value or that colleges and universities are worthless. It simply means the common notion that everyone should strive for a four-year baccalaureate degree may be obsolete. Young adults should be open to and on the lookout for a wide range of options to use their talent after high school.

• For some people, money that would otherwise be invested in a 2- or 4-year degree could better be used as seed money to start a company or to finalize and market an invention. For other people, a unique collection of postsecondary courses, apprenticeships and online training may be what they need. Others may want to find ways to fuse on-the-job training with a self-defined program of professional development.

Follow @CreditDonkey or write to Annette O'Connor at annette@creditdonkey.com

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