One statistic that gets bandied about frequently in education is this: The average college graduate will earn $1 million more over a lifetime than someone who has just a high school degree.
The problem is that the figure may be a bit of an exaggeration, according to Mark Schneider, the former commissioner of the National Center for Education Statistics. Now the vice president for new educational initiatives at the American Institutes for Research, Schneider wrote a paper for the American Enterprise Institute in which he suggests that the actual returns on a college education may be much smaller than commonly believed.
In his paper, Schneider tries to account for the fact that the payoff may vary, depending on the the school the student attends. The “Harvard-educated hedge fund manager” may be making, or used to make, hundreds of millions a year, he notes, while the “graduate from Bob’s college” may get promoted from assistant manager to manager of the retail store at the mall as a result of his degree. To get a better handle on the variation, the former statistics czar uses longterm federal survey data to compute actual earnings for graduates of colleges at different levels of competitiveness.
He also accounts for tuition expenses and the cost of the earnings that are foregone while a student is studying in college. He concludes that, while college does indeed provide a substantial payoff for most students at most colleges, it’s nowhere near the $1 million figure that gets quoted so much. That number, in fact, may be three times too high, according to Schneider.
Keep that in mind the next time you get a notice of another tuition increase from your child’s college.