Is A College Degree Worth It In 2023?

Is a college degree worth it? This is a question that is consistently on the mind of students and families as they think about the transition out of high school. More importantly, it’s a question that elicits an increasingly bearish response from the American public.

A recent poll from the Wall Street Journal and the University of Chicago found that 56% of U.S. adults believe that a four-year college education is “not worth the cost” while just 42% believe that it is. Men were more skeptical than women, a worrying indicator for higher ed given the crisis in male enrollment.

The data is clear - a college degree is worth it… if you graduate

The irony of these poll results is that the earnings data for college graduates tells a pretty consistent story. According to data published by the Federal Reserve Bank of New York, the wage premium for early-career college graduates was 52%, or $17,680. The unemployment rate for college grads was also far lower in the first quarter of 2023 at 2.1% versus 6.9% for young workers without a college degree.

The data becomes even more overwhelming when the analysis narrows down to the program level. Recently released earnings data from the US Department of Education’s College Scorecard (helpfully compiled by Michael Itzkowitz at the HEA Group) provides financial outcomes for 1.5 million recent graduates from more than 22,000 degree programs at US colleges and universities.

Once again, the financial outcomes for college grads were robust. Just 7.8% of programs and 5.3% of graduates had median earnings lower than $34,230 (the median for a high school graduate). In contrast, 19% of major programs and 21.4% of graduates had median earnings higher than $68,640 (2x the median for a high school graduate).

So we have two contradictory data points at play. A college degree continues to have a robust financial payoff, but Americans increasingly believe that it does not. Part of the story is the word “graduate,” which is referenced in all of the data above. Outcomes for adults who enter a four-year college but do not graduate are far less rosy, and less than 70% of four-year students complete their degree. But there is also a messaging and communications issue.

Lessons for higher ed: incorporate earnings data into your story, deepen investments in career services, and grow your way into lower costs

What can higher ed do to combat this misperception? First and foremost, you have to do a better job of telling the story above in your communication with students and families. Families increasingly make their college decision at a program-specific level. Institutional communication and marketing around majors will gesture abstractly at the payoff for a particular major program, but it rarely shares hard data. As I’ve outlined above, the data is (mostly) your friend - your marketing and your admissions staff should know this data by heart and incorporate it thoughtfully into their communication with students.

Communication with families is just the first layer. Many higher ed institutions suffer from an identity mismatch. You primarily view yourselves as institutions of higher learning, but families increasingly view you as a stepping-stone to career success. And this identity crisis shines through in the treatment of career services. Career centers consistently suffer from underinvestment, yet they are one of your most effective tools for incubating the kinds of skills that help students thrive in their careers and building relationships and programs with employers that facilitate job placement. Invest in your career centers.

The final layer to consider is cost - the question of whether a college degree is worth it rests inexorably on how much it costs to get one. How do you make a college degree cheaper? One “answer” is to cut headcount and budget, but that is often difficult and painful while sapping morale. The better approach is to grow your way into lower costs.

Unless your institution is literally at capacity with housing and facilities, you can reduce costs for each student while simultaneously growing overall funds available to your institution. The missing piece of the puzzle is budget. Higher ed leadership is routinely stingy in making funds available for enrollment teams. Try freeing up an extra $50,000 or $100,000 to invest in student recruitment, and growing your way into lower costs and happier students.