Board of Governors of the Federal Reserve System

Higher Education

A college education is widely recognized as a path to higher income and greater financial well-being. In fact, two-thirds of graduates from private not-for-profit and public institutions view the benefits of their own education as larger than the costs. To those who started college but did not complete their degree, and to those who attended private for-profit institutions, the net benefits of their additional education are less clear cut.

Value of Higher Education

Among all adults, 7 in 10 have ever enrolled in some educational degree program beyond high school and one-third have received a bachelor's degree. Economic well-being rises with education. Associate degree holders are somewhat more likely to be at least doing okay financially than those with some college or less, although a larger increase is associated with a completion of a bachelor's degree (figure 23).

Among those who have attended college, just over half say that the lifetime financial benefits of their higher education exceed the financial costs, versus one in five who say the costs are higher. The rest see the benefits as about the same as the costs. These self-assessments of education have changed little since the question was first asked in 2014.

The self-assessed value of higher education, while generally positive, depends on several aspects of a person's educational experience. Most importantly, those who complete their program and receive a degree are more likely to see net benefits than non-completers. For example, among those who attended college but are not enrolled and did not complete at least an associate degree (referred to in this section as having no degree), only one in three say their education was worth the cost. This fraction jumps to 46 percent for those with just an associate degree and 67 percent among those with at least a bachelor's degree (table 28).

Table 28. Self-assessed value of higher education (by education level)

The value of higher education also differs by type of institution attended.³⁶ Over 60 percent of graduates of bachelor's degree programs from public and not-for-profit institutions see benefits greater than the costs, versus less than 40 percent of graduates from for-profit institutions (figure 24). Because the survey collects information about specific schools, they can also be placed on a selectivity spectrum, based on standardized test scores, established by the Carnegie Classification.³⁷ Using this measure, public and not-for-profit institutions that are classified as less selective also outperform for-profit institutions as a whole on perceived value. After excluding selective and more selective institutions, 54 percent of graduates from public or not-for-profit schools still say the benefits of their education outweigh the costs, well above the share of graduates from for-profit institutions with this view.

The self-assessed value of higher education also varies by field of study (figure 25). Among those who completed a bachelor's degree, the share reporting benefits larger than costs range from 86 percent for engineering to 46 percent for vocational or technical fields.

Older adults are more likely to report net benefits from their education than are younger individuals. Nearly 8 in 10 people age 50 or older with a bachelor's degree say that the lifetime benefits of their degree are larger than the costs, versus about half of those under age 30. The age profile of self-assessment is similar to that from when the question was first asked in 2014 (figure 26). However, the age differences could either reflect smaller net benefits from education among younger graduates or the fact that younger graduates have not had enough time to fully experience the financial benefits of their education.

Look Back on Education Decisions

Most people value the education they have, yet with the benefit of hindsight and life experience, it is also common to think that different educational decisions would have been better. Among those without a college degree, almost three-quarters would like to have completed more education, and 13 percent would rather have completed less education in general or not have attended college (table 29). This strong desire for additional education is similarly true among those who feel that the education they received did not pay off.

Table 29. Changes would make now to earlier education decisions (by education)

Likewise, among those who completed at least an associate degree, the most common desired change (44 percent) is to have completed more education. Seven percent of those with an associate degree and 5 percent of those with at least a bachelor's degree would like to have had less education.

The reassessment of education decisions also varies by the type of institution attended. Just over half of those who attended a for-profit institution say they would like to have attended a different school, versus one-fourth of those attending a private not-for-profit institution and less than one-fourth of those attending a public institution (figure 27). This difference remains even after accounting for the selectiveness of the institution, level of education completed, and demographic characteristics of the student.

College Attendance

Having parents with additional education noticeably increases one's own likelihood of obtaining a
college degree. Among young adults (ages 22 to 29) who have a parent with a bachelor's degree, 71 percent received a bachelor's degree themselves, whereas 7 percent have a high school degree or less (figure 28).³⁸ In contrast, over half of young adults whose parents' education ended with high school also received a high school degree or less, and 19 percent obtained a bachelor's degree.

The type of institution attended also varies with parental education. Young adults whose parents did not attend college are much more likely to attend a private for-profit institution than those who have a parent with a bachelor's degree--12 percent versus 4 percent, respectively (figure 29).³⁹

Notable differences in types of institution attended also exist by the race and ethnicity of the student. Five percent of white young adults who attended college went to a for-profit institution, whereas among black and Hispanic college-goers the rate is nearly three times higher (figure 30). Differences in the quality of institutions attended likely contribute to disparities in financial well-being by race and ethnicity, even within educational groups, as discussed elsewhere in this report.

No College Degree

A wide range of reasons including financial costs, life events, or a lack of interest can explain why some people do not attend college or complete a degree. Financial considerations, including tuition being too expensive or a need to earn money, are the most common reasons, collectively affecting two-thirds of those who did not attend college and nearly three-fifths who did not complete their degree (table 30). A lack of interest in college, a desire to work, or family responsibilities such as child care were also important factors for some.

Table 30. Reasons for not attending college or not completing college degree

In some cases, women and men have different reasons for not completing a college degree. For example, women are much more likely than men to cite family responsibilities as a factor. In contrast, men are more likely than women to indicate a lack of interest in college or a desire to work instead of pursuing more education (table 31).

Table 31. Reasons for not attending college or not completing college degree (by gender)

 

References

 36. Individuals do not self-report the type of institution in the survey. Instead, the institution type is assigned by matching the name and location of the college reported by the individual with data from the Center on Postsecondary Research at the Indiana University School of Education. Return to text

 37. Selective institutions, as defined by the Carnegie Classification, are those whose first-year students' test scores are in the middle two-fifths of baccalaureate institutions; more selective institutions are in the top fifth of baccalaureate institutions. See also "Carnegie Classification of Institutes of Higher Education," web page, http://carnegieclassifications.iu.edu/. Return to text

 38. Individuals ages 18 to 21 are excluded here from the category "young adults" to reflect that many individuals in that age cohort have not yet completed their education. Results are also similar with a larger age exclusion to account for those continuing their education up through age 24. Return to text

 39. This gap is wider among people currently in their 30s, among whom nearly one-fourth of those with parents who did not go to college attended a for-profit, versus 5 percent of those with a parent who has a bachelor's degree. Return to text