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The Tipping Point of When College Just Isn't Worth It

The arguments for attending college are simple. Those with a college degree experience much less unemployment. Lifetime earnings are higher. You don't have to choose a football team to root for, as one is chosen for you. But is it that simple?

Of course, it isn't. There will be a point when the cost of college becomes equal to or greater than the benefits for many who plan on attending, and we are heading toward that point faster than many believe. All because of "malemployment."

Mal-anything can't be good
And it isn't. Malemployment is defined as when the education and skills of a worker are greater than what a job requires -- for example, a barista with a master's degree. Many college grads work in jobs that don't put their education to use and they're therefore never compensated for those extra skills.

Students are often blamed for studying an unmarketable major, like one in the humanities. And, yes, those with humanities degrees suffered the worst malemployment, near 34% in 2009, according to research (link opens PDF) from Drexel University. However, the popular refrain about the employability of those who major in science, technology, engineering, and math is not as true as it seems. Science majors suffered from 29% malemployment, with a wider spread for engineering, math, and computer science at 18%.

So what?
One might say there will always be a degree of unused skill. That is true, but the important point is that malemployment has increased over the past decade, especially for those between ages 20 and 29. From 2000 to 2010, malempoyment rose 9.3% for those between the ages of 20 and 24 and 6.4% for those between 25 and 29:

This means more college graduates are working in jobs that don't require their skills and are therefore earning less than they could, making a college education seem less worthwhile. For all levels of degrees from bachelor's to doctorate, those who were malemployed earned a median income of about $39,000. Those who were able to find jobs that made use of their degrees and skills earned a median income of roughly $76,000.

Forces against the college equation
Add this rising tide of malemployment to a few other depressing factors, such as tuition increases significantly outpacing inflation; the uptick in students due to the recession (which is finally trending downward); and higher learning available through other, cheaper means like OpenCourseWare.

Together, they show that it's only a matter of time before the expected value of a college education is a wash. Going to college will become a gamble on finding a job that fully compensates the degree -- and the best move, as with most casino games, could be simply not to play.

Mathematically, the variables are extremely complex to calculate exactly when college doesn't become worth it. And it is very much on a person-by-person basis. College will not be worth it much sooner for a prospective art history major who wants to attend a private university than an aviation mechanic who attends a public associate's program -- especially if that art history major does not qualify for any financial aid or grant programs and has to pay the full sticker price of tuition.

Skilled or unskilled sticky wages
Even students who think they're studying and paying to learn the right skills for employment can be let down with the stagnant domestic job market, further declining college's potential payback. The CEO of Caterpillar  (NYSE: CAT  ) , Doug Oberhelman, says in a BusinessWeek article: "I, for one, struggle a little bit with a $250,000 education for a philosophy degree. They are wonderful people, but we can't employ philosophers in manufacturing in the United States." The key part of that quote is "in the United States," as offshoring has had a signficant downward pressure on wages in the U.S.  According to the same BusinessWeek article, since 2008, Caterpillar increased its American head count by 2% while its worldwide workforce outside of America increased 19%.

Even if a graduate isn't afflicted with malemployment, their wages can't escape the effects of globalization.

While higher education offers plenty of social benefits other than employment, those intangibles might need to be evaluated more closely as a few years' experience and salary in place of full-time studying becomes the economically sensible choice.

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Read/Post Comments (8) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 02, 2013, at 8:03 PM, michaelbinCA wrote:

    The individual who is intelligent to attend college (or not attend) should be able to make up their own minds. I did. Didn't read an article and decide. The CEO of Caterpillar (NYSE: CAT ) , Doug Oberhelman, says in a BusinessWeek article: "I, for one, struggle a little bit with a $250,000 education for a philosophy degree. They are wonderful people, but we can't employ philosophers in manufacturing in the United States." Exactly how does this guy for certain. Has he conjured up some image of a philosopher? F him. Twice. I have a Ph.D. in biochemistry which allows me as a Doctor of Philosophy to make philosophical statements regarding mostly anything. Mainly scientific statements but nonetheless. In fact, I bought a new Caterpillar D8 Bulldozer in 1995. Not bad for a philosopher. And, learned to operate it quite efficiently.

  • Report this Comment On October 03, 2013, at 12:02 PM, Schneidku40 wrote:

    I think the Caterpillar CEO misspoke. He probably didn't mean that they CAN'T employ a philosopher, but that for the job they would be qualified for in manufacturing they would be malemployed, as per the article. A philosopher won't be hired into an engineering position in the R&D department or as a CFO. The only likely positions for them are on the manufacturing line, which they don't need their college degree for. A high school degree is sufficient. Just as you, michaelbinCA, would be considered malemployed if you operated your D8 for a living even though you have a PhD.

  • Report this Comment On October 03, 2013, at 1:30 PM, rohitharsh wrote:

    I think its time to see what is one's major rather than just 'he/she went to college'. I am a software developer and there're are plenty of jobs in my field. In fact its hard to find a decently qualified person to do the job. So what sort of education one has is an important aspect.

  • Report this Comment On October 03, 2013, at 4:04 PM, Fabin81 wrote:

    I'm in a field where masters degrees starting pay is in the $30,000's. My buddy at his workplace hires dudes without college degrees for basepay $71,000 plus bonuses. My buddy said he'd put in a good word for me. lol. Not including all the time and debt college made me, I don't feel like a smart man... lol.

  • Report this Comment On October 03, 2013, at 4:29 PM, phillyarchitect wrote:

    Perhaps we could learn something from Germany. There they have Technical Universities and also two year technical programs. They have found a way to create a better match between the needs of the employers and the higher education center. They also fund the higher ed system so that tuition is much less expensive. They still have great liberal education universities for those who are committed to those fields. I do think one has to realize that this has financial consequences for later life. At least there these students aren't burdened with huge debt.

  • Report this Comment On October 03, 2013, at 9:49 PM, coolhandred wrote:

    The discussion of whether or not there is value in obtaining a college education is absolutely incomprehensible. Who in there right mind would choose ignorance over enlightenment???

    "Doug Oberhelman, says in a BusinessWeek article: "I, for one, struggle a little bit with a $250,000 education for a philosophy degree. They are wonderful people, but we can't employ philosophers in manufacturing in the United States."

    Anyone with an ounce of sense understands the key element obtained by attending a college is the ability "to learn how to learn." All education is self education, and the best teachers offer students new ways to open doors, make inquiries and explore their passions. Critical and creative thinking are the key to progress.

    By his comment, Doug Oberhelm, opines his contempt for creativity, and thus I am not going to invest in Caterpillar.

  • Report this Comment On October 03, 2013, at 10:11 PM, thescruggs wrote:


    It would appear that your college experience didn't free you of your ignorance. The lack of a college degree does not make someone ignorant.

    I for one did not receive a college degree yet I make low 6 figures while owning my own business. I was able to put the skills that I learned(which was hard since I didn't go to college and become enlightened) in the real world during my "college" years to use along with the money that I didn't spend on college to start this business.

    I have found the abilities of an individual to learn has nothing to do with their level of education. If you really need to spend $250K "to learn how to learn" then you will most likely find yourself part of the malemployment statistic.

  • Report this Comment On October 04, 2013, at 10:53 AM, anthony1775 wrote:

    I struggle now with this debate. I already have a bachelor's degree, but 13 years removed from graduation, I am considering pursuit of a masters. Yet, I feel part of that pursuit is based on a certain societal pressure or expectation that you should get a masters or you that you have to get a masters to remain competitive. I'm not convinced and personally there's a heck of a lot of other things I'd like to do with my time if I don't need the advanced degree. As a background, I'm military and earned my degree through a commissioning program. Now I'm about 2-3 years out from retirement. I'd like to teach (social studies) after retirement, but my wife and I also discuss small business ideas. I'm not convinced I need a masters degree to do either of those things, and generally assume that my bachelors in education plus 20+ years in the military have earned me all the knowledge and experience I need to be successful. Am I wrong?

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