How to earn more with less education

Senior Columnist
Yahoo Finance

Everybody wants the best possible return on investment. With education, however, the risks of both under- and overinvesting are confounding. Too little education, and you could be locked out of prosperity forever. Too much, and you can end up enslaved to student debt without the earning potential to dig out.

New research from Georgetown’s Center on Education and the Workforce highlights a few ways students can right-size their education–in effect, paying the least for the most career potential. The study, for instance, points out that some training programs or degrees can set people up for more lucrative careers than fancier degrees that cost thousands more and take far longer to obtain.

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New graduates leave High Point Solutions Stadium after a Rutgers University graduation ceremony in Piscataway Township, N.J., Sunday, May 13, 2018. (AP Photo/Seth Wenig)
New graduates leave High Point Solutions Stadium after a Rutgers University graduation ceremony in Piscataway Township, N.J., Sunday, May 13, 2018. (AP Photo/Seth Wenig)

A two-year associate’s degree in a so-called STEM field (science, technology, engineering or math), for instance, leads to a median mid-career salary of $60,000. A four-year bachelor’s degree in humanities or liberal arts, by contrast, leads to a median salary of just $53,000. Even a training certificate in a STEM, which leads to a $48,000 salary, is more lucrative than a bachelor’s in psychology or social work, which leads to a $47,000 salary.

[See why you can’t get the job you want.]

More education still pays, on average. Workers with graduate degrees earn the most, followed by those with bachelor’s degrees, associate’s degrees, and so on. High school dropouts earn the least. And many experts still say there’s considerable value to a liberal-arts education that provides well-rounded learning, even if it doesn’t directly prepare students for a job.

But the cost of higher education, which has been rising faster than inflation for years, has led to an explosion in student debt and prompted new questions about the monetary value of learning. Students owe a whopping $1.4 trillion in loans, according to the New York Federal Reserve, with more than one-quarter of borrowers owing $25,000 or more and 16.5% owning upward of $50,000. Default and delinquency rates have risen in recent years, while they’ve fallen for most other types of loans.

No need for a bachelor’s degree

There’s also a growing need for “middle-skill” workers who don’t necessarily need a college degree, such as salespeople, technicians and tradespeople such as plumbers and welders. “Part of the problem is the typical American family really believes that a four-year degree is a path of upward social mobility,” Pradeep Khosla, chancellor of the University of California, San Diego, said at the recent Milken conference Global Conference in Los Angeles. “They may not be all wrong, but it’s not all correct either.” Khosla and others argue for better career training in high schools, including programs that connect students with local employers who help develop curricula to train them for jobs they need to fill.

The Georgetown data highlight a small number of fields where workers can earn middle-class pay with less than a college degree. Not all STEM fields are lucrative. “Even with STEM, you have to be careful,” says Artem Gulish, senior policy strategist for the Georgetown CEW. “It’s usually the more technically driven fields – engineering, information technology – where you’re going to get more bang for the buck. In life sciences, like biology, without graduate education, you’re probably not going to do as well.”

For those less technically inclined, health care is the other field with good opportunities below the bachelor’s threshold, in part because the retirement of the baby boomers guarantee this field will continue to grow. With the right training, there are decent-paying opportunities in nursing, lab work, equipment repair, occupational therapy and many other specialties.

There’s a pernicious problem, however: It can be devilishly hard to determine which skills are in most demand, and where. The state of Virginia has a well-regarded tool for helping people determine what jobs are available, what training they require and what they’re likely to pay. But that’s the exception. “This is one of the challenges,” says Gulish, “to make the connections between programs of study and occupations. What’s currently out there is not very useful.”

Community colleges, often overlooked, can be a starting point, since they sometimes partner with local employers to develop training programs likely to lead to jobs. Georgetown’s CEW has done state-by-state research on lucrative jobs that don’t require a college degree. The nonprofit group Working Nation has tips and leads for workers trying to “reskill” and transition from one field to another. Many states operate programs meant to pair workers seeking training with employers seeking them, such as Tec-P in Colorado.

Students going for a bachelor’s degree can optimize their return on education investment, as well. The recent Georgetown study lists more than 150 areas of study, along with median pay for those with both a bachelor’s and a graduate degree. In more than two dozen fields—including the arts, linguistics, anthropology and the oft-maligned sociology—median pay for those with a graduate degree is less than $60,000. But there are nearly a dozen fields—including actuarial science, pharmaceutical science and many types of engineering—where median pay for those with a bachelor’s degree is above $80,000. Study hard, but make sure you study the right thing.

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Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman

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