Board of Governors of the Federal Reserve System

Higher Education

A college education is widely recognized as a path to higher income and greater economic well-being. Indeed, two-thirds of graduates from private not-for-profit and public institutions view the financial benefits of their 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, however, the net benefits of their education are less clear-cut.

Value of Higher Education

Among all adults, 7 in 10 have ever enrolled in an educational degree program beyond high school and one-third have received a bachelor's degree. Economic well-being rises strongly with education. Those without any college are the least likely to be doing well financially. 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 (figure 21).

Among those who have attended at least some college, over half say that the lifetime financial benefits of their higher education exceed the financial costs, versus 1 in 5 who say that the costs are higher. The rest see the benefits as about the same as the costs. These self-assessments of the value 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 previously attended college and did not complete at least an associate degree, 3 in 10 say that the benefits of their education were greater than the cost. This fraction jumps to nearly half of those with just an associate degree and two-thirds among those with at least a bachelor's degree (table 21).

Table 21. Self-assessed value of higher education (by education level)

The value of higher education also differs by the type of institution attended.¹⁹ Two-thirds of those with bachelor's degrees from public and private not-for-profit institutions see their educational benefits as greater than their costs, versus half from for-profit institutions (figure 22).

This difference is not driven by for-profit schools being less selective in the students they admit. Public and private not-for-profit institutions that are less selective—based on lower standardized test scores of admitted students—also outperform less selective for-profit institutions on perceived value.²⁰ Among students who attended less selective institutions, 55 percent of graduates from public or private not-for-profit schools say the benefits of their education outweigh the costs, well above the 36 percent share of graduates from for-profit institutions with this view.

The self-assessed value of higher education also varies by field of study (figure 23). Among those who completed a bachelor's degree, the share reporting benefits larger than costs range from 81 percent for engineering to 55 percent for vocational or technical fields and the humanities.

Older adults are more likely to report net benefits from their education than are younger adults. Nearly 8 in 10 individuals age 50 or older with a bachelor's degree say that the lifetime benefits of their degree are larger than the costs, versus over half of those under age 30 (figure 24). The age differences could 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, nearly three-quarters would like to have completed more education, and 12 percent would rather have completed less education in general or not have attended college (table 22). The strong desire for additional education is similarly true among those who feel that the education they received did not pay off.

Table 22. 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 (40 percent) is to have completed more education, followed by choosing a different field of study (36 percent). Nine percent of those with an associate degree, and 6 percent of those with at least a bachelor's degree, would prefer to have had less education.

The reassessment of education decisions also varies by the type of institution attended. Half of those who attended a private for-profit institution say they would like to have attended a different school, versus nearly one-fourth of those attending a private not-for-profit or public institution (figure 25). This difference remains even after accounting for the selectiveness of the institution, level of education completed, the parents' level of education, and demographic characteristics of the student.

College Attendance

Having parents who are college graduates 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, 7 in 10 received a bachelor's degree themselves, and less than 1 in 10 have a high school degree or less (figure 26).²¹

In contrast, 17 percent of young adults whose parents did not attend college obtained a bachelor's degree, and 6 in 10 have a high school degree or less.

The type of institution attended also varies with parental education. Young adults whose parents did not attend college are more likely to attend a private for-profit institution than those who have a parent with a bachelor's degree—13 percent versus 2 percent, respectively (figure 27).²²

Across all racial and ethnic groups, the majority of young adults who attended college went to public institutions. Yet more than twice as many Hispanic young adults who attended college went to a for-profit institution compared to whites, and five times as many black college-goers did so (figure 28). Differences in the quality of institutions attended likely contribute to disparities in economic 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 (table 23). Financial considerations, including costs being too expensive or a need to earn money, are the most common reasons, cited by 67 percent of young adults who did not attend college and 62 percent of those who did not complete their degree. A lack of interest in college, a desire to work, or family responsibilities such as child care are also important factors for some.

Table 23. Reasons for not attending college or not completing college degree

In some cases, women and men have different reasons for not attending college or 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 (table 24).

Table 24. Reasons for not attending college or not completing college degree (by gender)

 

References

 

 19. 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

 20. 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/. The remainder are referred to here as "less selective" institutions. Return to text

 21. 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 if individuals up through age 24 are excluded. Return to text

 22. This gap is wider among people currently in their 30s, among whom over one-fifth of those with parents who did not go to college attended a for-profit, versus 7 percent of those with a parent who has a bachelor's degree. Return to text