The Correlation Between a College Degree and Lifetime Earnings
By George Gallagher
It has always been said that a person does not need a college degree in order to become very wealthy over time. This is still the case as there are many people throughout history who have bootstrapped their business and started with basically nothing. There are also many people who never even finished their high school education and were able to create businesses worth millions, or even billions, of dollars.
However, most people would agree that getting a good college education will form the basis of a successful career or business. It certainly is an easier route to take than trying to create a business from scratch with virtually no educational background. Recently, researchers looked into how much a higher education is actually worth. For instance, it might surprise you to know that a master’s degree is worth $1.3 million more in lifetime earnings than a simple high school diploma. This is according to a recent report that was released by the U.S. Census Bureau.
The report also revealed that over an adult’s working life, high school graduates can expect to earn about $1.2 million on average. Those with bachelor’s degrees can expect a cool $2.1 million while people with master’s degrees can usually anticipate earning about $2.5 million. Those who earn a doctorate can expect $3.4 million during their working days. However, people who earn a professional degree do the best earning around $4.4 million.
The report was released recently but is based upon figures from 1999 for people ages 25 through 64. Another part of this report showed that more Americans are staying in school longer than ever. In the year 2000, 84 percent of American adults over 25 had at least finished high school while 26 percent continued on to earn a Bachelor’s degree or higher.
Some other interesting highlights from this report showed that in 1999 the average annual earnings ranged from about $18,900 for high school dropouts to $25,900 for high school graduates. It also showed that the average annual earnings for a college graduate was $45,400 while those who had professional degrees, such as dentists, medical doctors, lawyers and veterinarians, earned $99,300.
The report also broke it down by different segments of the population. For instance, it showed that when you compare people who have attained a Bachelor’s degree with those who just have a high school diploma, the earnings increased about $1 million for non-Hispanic whites and about $700,000 for African-Americans, Pacific Islanders, Hispanics and Asians.
There seems to be no question that getting higher education definitely correlates with most people’s lifetime earnings. The road is a lot easier when a person has a college degree. However, there are also those people who have such an entrepreneurial spirit that educational level doesn’t seem to matter. Work ethic definitely seems to factor into the scenario no matter what the educational level is.
It shouldn’t be assumed that someone doesn’t need a college education. Depending upon the type of business they wish to go into, knowledge and information must be attained in order to make that happen. By going to college, people are able to gather the necessary information and skills that can make them successful in their business life. The numbers for this study seem to match up with the fact that a college education will not only increase someone’s annual earnings but will also increase their lifetime earnings as well. That being said, there are also those people who go to college and don’t seem to do anything with their degree. A lot of success depends not only just on someone’s educational level, but also on their inner drive and persistence.
George Gallagher works with colleges, bloggers, and financial planners. He regularly contributes to top finance blogs and helps students with their options for private student loans.