The Million Dollar Lie

In July of 2002, the U.S. Census Bureau release a report entitled, "The Big Payoff: Educational Attainment and Synthetic Estimates of Work-Life Earnings."  At the time this report didn't make huge waves, because it confirmed what everybody thought was true all along. This is a report that was supposed to prove the value of a college education, specifically focusing on the "fact" that kids who went to college make a lot more money over a lifetime than kids who don't.  You have heard teachers, politicians, and the media claim that graduating from college means you are going to make a million dollars more in a life time than a standard high school graduate.  The only problem is, as literally tens of thousands of college graduates have learned the hard way after it was too late, is that those numbers just aren't true, and the report even suggests as much. Too bad teachers, politicians, and the media either did not read this report closely, or they just assumed they could lie to you without being caught.  Whether the intent was evil or a misunderstanding or ignorance, there is very little argument that the one million dollar figure is a lie.

The first obvious major problem with the so-called million dollar report is that the numbers they use come from working ages 25-64.  This means the study only considers the money earned in those years...even though most of my buddies with high school degrees did not wait 7 years to start working. I'm going to go out on a limb and say that most 18 year olds don't get to wait 7 years before working, either.

That means if a high school graduate makes $25,000 a year (which can be done at a gas station, much less a factory job), not an unreasonable estimate, for only the 4 years that a college graduate is attending college, there is a swing in the numbers of $100,000.  And that's assuming that the high school worker doesn't get a single raise in 4 years, which doesn't seem to likely even in the crappiest jobs.  Not even counting the 4 year advantage in earnings that a high school graduate has over a person attending college skews the numbers in a really blatant and irresponsible manner.  There is also a value to the work experience being gained by the high school graduate that a person attending college is not receiving.

What else does a college graduate have that a high school graduate does not?  The answer is a college graduate gets into MASSIVE DEBT. This might not affect the earnings portion of the study, but forgetting that a college graduate on average is going to owe around $25,000 on the low end (numbers provided by http://www.finaid.org/loans/) is one of the biggest "oversights" of the study. 

College graduates are not going to just pay those $25,000 in loans back, but $25,000 that has an interest anywhere between 5-12% or more.  That easily turns into a $50,000 debt, maybe much much more.  What about the students who borrow upwards of $100,000 in student loans?  I have no idea how they are suppose to pay that money back!

To make matters even worse, according to the USA Today, student loan defaults are at their highest rate since 1998.  Trying to manage that much debt with a $30,000 a year job is next to impossible, especially when you consider the other things you want to purchase after college, like a house and a new car, and God help you if you have a family with kids on the way.

Is a college degree a rip off?  Well looking at the "million dollar" report, it becomes a basic math problem.  Anyone who reads the report will see that this study has some basic math problems when figuring out the numbers.  What this study does is take the years you worked between the ages of 25 and 64, so 40 years total, and multiples that by what the average college graduate or high school graduate makes a year according to the 2000 census. 

So in the case of College graduates, they make an average of $52,200 a year multiple that by 40, and an average college graduate makes $2,088,000.  The census shows that an average high school graduate makes $30,400 which we multiple by 40 and get $1,216,000. $2,088,000 - $1,216,000 = $872,000, the difference between college graduates earnings and a high school graduates earnings. 

The first problem I have is that this doesn't even equal a million dollars more, so I’m not sure where the million dollar number is coming from.  $128,000 is a pretty big margin of error. 

Secondly, we are assuming you work every year for those 40 years.  Unemployment can always hit, and this last recession has shown white collars and degree holders were hit as hard or harder than any other group. Third, we are also assuming you start at that average rate, and you always make that much.  What if you start at $30,000 and it takes you 25 years to get to a pay of $54,000...then the numbers are off by a tremendous amount. 

Last, the average pay each group makes is going to be unbalanced due to the inclusion of the top money getters, and the poorest people of each group.  Some college graduates make a million dollars a year because they inherited a job from an already rich Mommy and Daddy while there are some high school graduates who just want to be drifters and have no desire to work.  So what REALLY is the average pay for the common college graduate and high school graduate?  That is the real number that needs to be used. 

In addition, the average pay needs to be broken down by college major.  Sorry to break it to you, but history majors, English majors, and philosophy majors will never make as much as engineers.

College is an even worse deal for women. The biggest injustice currently being done by this study is that potentially valuable findings in this study, such as wide income differences between men and women, are being swept under the rug and ignored just so they can lie about college being a million dollar investment. 

The shocking part of this study is that women, according to the study's numbers, who graduate from college will make about $1.6 million dollars in a lifetime.  Women who graduate from high school will make about $1.0 million dollars in a lifetime, a difference of only $600,000, nowhere near the one million dollar mark.  When you add on the years of work missed by going to college, as well as the debt received by going to college, is college really even worth it for women?

A closer examination of the numbers shows that the average college graduate is not going to make a million dollars more (including debt) than the average high school graduate.  And none of this is even considering the difference that comes when high school graduates start a 401-k or IRA right after working. The damage being done by this study is enormous, constantly encouraging people to borrow more and more money to get a college degree that is worth far less than advertised.  This is all being done under false pretenses, and it is something that should be stopped. 

To make matters worse, the real million dollar difference comes between women with a college degree and men with a college degree, and yet nothing is being mentioned about that.  We are not advocating sitting at home after high school, never experiencing life, and never trying to better yourself.  All we are saying is take a close look at the numbers and make an educated decision about college being right for you instead of following the lemmings off the cliff.

These are other articles of ours on HubPages that you might find of interest:

Women College Graduates Earn Less

Is College the Best Route for Black Students?

Top 6 Reasons College Is Overrated

Community College Best Idea