Board of Governors of the Federal Reserve System

Higher Education

Although there are many potential avenues to success, a college education is widely recognized as a path to higher income and greater economic well-being. Indeed, 7 out of 10 adults with a bachelor's degree viewed the financial benefits as larger than the costs. However, this is not uniformly the case as there were differences in the perceived value of education across demographic groups. Moreover, the likelihood of pursuing and completing higher education varied by race and ethnicity and by one's family background, as did the reasons for these educational decisions.

Value of Higher Education

Among all adults, 7 in 10 have ever enrolled in an educational degree program beyond high school, and 35 percent have a bachelor's degree. Economic well-being in 2019 increased with education, although the effects differed across demographic groups. Those without any college—and especially those who did not have a high school degree—were the least likely to report doing well financially. Financial well-being was higher for those who attended college, and even more so among those who completed at least an associate degree (figure 27). In contrast to associate degrees, certificates and technical degrees were associated with only modest increases in well-being over those reporting a high school degree. However, this may have been due to either heterogeneity of these programs or the socioeconomic and educational background of students who attend them.³⁵

Additional education was associated with greater financial well-being within each racial and ethnic group. Yet, significant racial and ethnic disparities also existed within each level of educational attainment (table 19). For example, overall financial well-being among black adults with some college or a technical degree was below that among white adults with a high school education or less. Financial well-being was higher among black adults with a bachelor's degree than among those with less education, although the difference across racial groups remained even for those with higher levels of education.

Income levels also increased with education within all racial and ethnic groups, with larger differences between black and Hispanic adults with at least a bachelor's degree than those with a high school education or less. Yet, within every level of education, the earnings of black and Hispanic adults are below the earnings levels for adults overall. These findings align with the literature about differential economic outcomes by racial group and education.³⁶

Table 19. Financial well-being and income (by education and race/ethnicity)

Consistent with the positive relationship between education and financial well-being, 53 percent of adults who went to college said that the lifetime financial benefits of their higher education exceed the financial costs (table 20). This compares to one in five who said that the costs are higher. The rest saw the benefits as about the same as the costs. These self-assessments of the value of education have changed little over the past five years of the survey.

Table 20. Self-assessed value of own higher education (by education)

The self-assessed value of higher education, while generally positive, depended on several aspects of a person's educational experience. Most importantly, those who completed their program and received a degree were more likely to see net benefits than non-completers. For example, among those who went to college but did not complete at least an associate degree, 3 in 10 said their education was worth the cost. This fraction jumped to nearly half of those with an associate degree and 7 in 10 among those with at least a bachelor's degree.

The self-assessed value of higher education also differed by race and ethnicity. Among those who completed some college, a technical degree, or an associate degree, there were relatively small differences between white, black, and Hispanic adults' perceptions of whether the benefits of their educations exceed the costs. However, among those who completed at least a bachelor's degree, a larger gap emerged (figure 28). While 69 percent of all bachelor's degree recipients felt that their education was worth the cost, 56 percent of black, 64 percent of Hispanic, and 71 percent of white bachelor's degree recipients felt this way. This suggests that self-perceptions of the value of higher education in 2019 were not equal across racial and ethnic groups.

An additional contributor to differences in how people viewed their education was the type of institution attended.³⁷ Consistent with previous years of the survey, 7 in 10 of those with bachelor's degrees from public or private not-for-profit institutions saw their educational benefits as greater than their costs, versus less than half of those from for-profit institutions. A similar gap across institution types existed among those who completed an associate degree.

Look Back on Education Decisions

Another way to assess the value of education is to consider what people would have done differently if given the chance. Most people valued their education, yet with the benefit of hindsight and life experience, it was also common to think that different educational decisions would have been better. Among those with some college or a technical degree who were not enrolled in school at the time of the survey, three-quarters would like to have completed more education, compared to 11 percent who would rather have completed less education or not have attended college (table 21).

Table 21. Changes would make now to earlier education decisions (by education)

Likewise, among those who completed an associate degree, the most common desired change (69 percent) was to have completed more education, followed by choosing a different field of study (34 percent). Seven percent of those with an associate degree and 5 percent of those with at least a bachelor's degree would have completed less education.

The reassessment of education decisions also varied by the type of institution attended. Fifty-four percent of those who attended a for-profit institution said they would like to have attended a different school, versus one-fourth of those who went to a private not-for-profit or public institution (figure 29). This difference remained even after accounting for the selectiveness of the institution, level of education completed, the parents' level of education, and the student's demographic characteristics.

Intergenerational Mobility in Higher Education

The survey responses indicate a strong correlation between the education of one's parents and one's own education. Among adults ages 22 to 39, parents' college attendance significantly increased the likelihood of attaining a bachelor's degree.³⁸ Seventy-two percent of those with at least one parent with a bachelor's degree went on to complete a bachelor's degree themselves. This exceeded the 18 percent of those whose parents did not go to college who completed a bachelor's degree (figure 30).

Irrespective of the education of one's parents, rates of higher education were lower among black and Hispanic young adults. Two in 10 white adults under age 40 whose parents did not go to college completed at least a bachelor's degree themselves. Yet, slightly over 1 in 10 black or Hispanic adults under age 40 whose parents did not go to college went on to get a bachelor's degree (figure 31).

Additionally, some people whose parents went to college did not pursue higher education. Twenty-eight percent of adults ages 22 to 39 with a parent who has a bachelor's degree did not have one themselves. Among black and Hispanic adults ages 22 to 39, 49 percent and 46 percent, respectively, with a parent with a bachelor's degree did not have a bachelor's degree. Among white adults whose parents completed a bachelor's degree, 24 percent did not have at least this level of education.

Looking at adults of all ages, rather than just those under age 40, highlights the relative consistency of first-generation college attendance over time. Among adults in each age range whose parents did not go to college, between 18 percent and 21 percent obtained a bachelor's degree. Similarly, for those with at least one parent with some college but no degree, between 33 percent and 36 percent obtained a bachelor's degree.

However, the likelihood of college attendance among second-generation students was higher among young adults. Among those with at least one parent having a bachelor's degree, the likelihood of obtaining a bachelor's degree was higher among adults under age 45 than was the case for older age groups (table 22).

Table 22. Share completing a bachelor's degree (by parents' education and age)

Factors for Education Decisions

Respondents cited a variety of reasons—including financial costs, life events, or personal preferences—as contributing to their educational decisions (table 23). Similar to years past, the high cost of college was a contributing factor to not continuing or pursuing education for many people. Six in 10 adults ages 22 to 39 who never went to college or never finished an associate or bachelor's degree cited cost as a reason for their decision. Some also cited other barriers such as childcare, a health issue or illness, or needing to work to support their family. Yet, over half (57 percent) of those who did not go to college, and nearly half (47 percent) of those who did not complete a certificate or degree, said they did not attend college or left college because they preferred to work instead.

Table 23. Reasons for not attending college or not completing at least an associate degree

Between racial and ethnic groups, there were differences in reasons for not continuing or not pursuing higher education. Across all groups, the most prevalent reasons for not continuing education were the financial barriers of the direct expense of college and needing to work to support family (table 24). Yet, there were notable differences between races and ethnicities related to familial responsibilities. Sixty-three percent of black and Hispanic adults ages 22 to 39 who left or did not begin college did so in order to support their families financially. Providing financial support was a reason for not completing a certificate or degree for 42 percent of white adults in this age range.

Table 24. Reasons for not attending college or not completing college degree (by race and ethnicity)

Not completing education due to family financial needs also differed between those who would have been first-generation college graduates and those with a parent who went to college. Adults ages 22 to 39 who did not complete college but who had a parent who did so were less likely to say that financially supporting one's family contributed to their decision (39 percent) than were those with parents with high school educations or less (59 percent).

 

References

 

 35. Recipients of certificates and technical degrees were, for example, more likely to say that the benefits of their education were worth the cost than were those who left college with no degree. Forty-eight percent of certificate or technical degree recipients said that the benefits of their education exceeded the cost, compared to 31 percent of those who left college without a degree. Although the question of the returns for these programs is important, the relatively small sample size and the diversity of programs encompassed by certificates and technical degrees limit the ability to fully explore the returns to certificates and technical degrees in this report. Return to text

 36. Darrick Hamilton, William Darity, Anne E. Price, Vishnu Sridharan, and Rebecca Tippett, Umbrellas Don't Make It Rain: Why Studying and Working Hard Isn't Enough for Black Americans (Oakland: Insight Center, April 2015), http://www.insightcced.org/wp-content/uploads/2015/08/Umbrellas_Dont_Make_It_Rain_Final.pdf. Return to text

 37. Individuals did not self-report the type of institution in the survey. Instead, the institution type was assigned by matching the name and location of the college reported by the individual with data from the Center on Postsecondary Research at the Indiana University School of Education. Return to text

 38. This section excludes adults ages 18 to 21, since many in this age group have not yet completed their education. Return to text