College-Educated Households Hold Increasing Proportion of Income

Is a college education worth it? You've probably heard both sides of the debate. On the one hand, student debt is growing at a staggering rate, and job opportunities seem to be getting scarcer. Many would claim that investing in a college education is a mistake, and that the costs far outweigh the benefits.

On the other hand, new research is suggesting just the opposite: that college educations are paying significant dividends, and that an increasingly large percentage of money earned in the U.S. is going to households headed by college-educated individuals.

New data released by U.S. Census Bureau draws an encouraging picture for prospective college students and sheds some light on our nation's widening income gap. In 1991 (the first year such data is available), households headed by college-educated individuals earned 37% of the nation's income, compared to the 28% earned by households headed by individuals with only a high school diploma. The discrepancy between these two groups has widened significantly since then; college-educated households' earnings have risen to account for 50% of the nation's aggregate households income, while the earnings of households with only a high school diploma have declined to 20% of the nation's aggregate households income.

This is a significant difference between the two groups. Only one-third of households are headed by college-educated individuals, but they earn half of the nation's income. Furthermore, the college-educated group is the only group whose earnings have increased since 1991; all others have declined. This accounts for widening income gap in the U.S.; college-educated people are earning more and more money, and people with a high school diploma (or less) are earning less and less.

There at other factors at work here, of course. For example, college-educated individuals are statistically more likely to be married, and to therefore have a secondary earner in the household. Furthermore, college-educated individuals are more likely to be married to a college-educated spouse, which accelerates the income gap even more.

The Bureau of Labor Statistics reports that individuals with a college education (bachelor's degree or higher) on average earn much more than individuals with a high school diploma ($48,944 vs. $36,356). College-educated individuals also experience a much lower unemployment rate (3.8% vs. 7.3%), and fare better during periods of economic instability.

The Bottom Line

Is a college education worth it? The statistics provided by the U.S. Census Bureau and the Bureau for Labor Statistics would indicate that, yes, it is. But be cautious! A college education in no way guarantees a high salary. Students should chart their course with care, choosing goals and researching which educational path will best carry them to those goals. Students should also take advantage of the services their college provides (such as financial aid, career planning, and guidance counseling) in order to reap the most benefits from their college investment. Students who drink and party their way through college are not likely to receive the dividends outlined in this article, but that doesn't mean college itself is a poor investment. College requires focused effort, and rewards those who put forth that effort.

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