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In the News

College Grads Earn Nearly Three Times More Than High School Dropouts

The high cost of college has left some Americans, including Washingtonians, questioning whether it pays to pursue a higher education, especially at a time when job outlook continues to be challenging. A new batch of government data suggests it’s worth the investment, even in a tight economy. People with a college degree earned nearly twice as much as people with a high school degree in the last three months of 2011, a Census Bureau report released Tuesday found.

By Neil Shah – Wall Street Journal

By some measures, nearly 50% of working college grads are in jobs that don’t require a college degree — but for most people that diploma does pay, eventually.

The U.S. Census Bureau on Tuesday said the typical American with a college degree earned $11,749 in the final three months of 2011 — the latest data available. That’s nearly three times more than the $4,026 earned by the typical American who didn’t graduate from high school. This education premium was even higher for those with a post-graduate degree: Their median earnings — the level at which 50% are above and 50% are below — was $15,733 in the fourth quarter of 2011.

The value of a college education has come into doubt thanks to rising tuition costs, ballooning student-loan debt, high unemployment and a sluggish economy that’s keeping millions of college-educated Americans in jobs that don’t require their education. As the Journal has reported, new research suggests the job opportunities of college-educated Americans may not improve much even when the economy rebounds.

Still, the hard numbers show Americans with higher levels of education tend to benefit long-term — and that the U.S. is struggling with a divide not just of income but of education. The unemployment rate for Americans 25 years and older with a Bachelor’s degree was 3.8% in February, far below the nation’s overall 7.7% rate. The jobless rate for people without a high-school diploma? 11.2%. High-school graduates without college faced a 7.9% rate.

Worse job prospects mean lower earnings — but also less income, a broader category that includes things like returns from investments in the stock market. The median income for an American with a post-graduate degree in the final three months of 2011 was $14,731, nearly five times the $3,083 income of someone without a high-school degree.

Young people, especially those with jobs that don’t require their education, are stuck between a rock and a hard place in this economy — and many of them know it: Recent research suggests they’re cutting back on their overall borrowing, yet taking on more and more debt via student loans.

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