Born in the bottom without higher education: 45% chance of remaining there

As the semester draws to a close at schools and universities across the country and college applications are submitted, the Treasury Department has released a report that should be food for thought for students scrambling to complete their work and finish their exams. The new report, prepared in conjunction with the Education Department, shows that investing in education expands job opportunities, boosts America’s competitiveness, and supports the kind of income mobility that is fundamental to a growing economy.


Higher education is a critical mechanism for socioeconomic advancement among aspiring individuals and an important driver of economic mobility in our society. Moreover, a welleducated workforce is vital to our nation’s future economic growth. American companies and businesses require a highly skilled workforce to meet the demands of today’s increasingly competitive global economy. Higher education is provided through a complex public-private market, with many different individuals and institutions participating. While postsecondary education has become increasingly important, there have also been growing concerns about the cost and affordability of higher education. This report discusses the current state of higher education, with a brief high-level overview of the market and a more detailed discussion and analysis of the financial aid system. We also discuss the important changes the President has made to make higher education more accessible and affordable. Our key findings are:
• The economic returns to higher education remain high and provide a pathway for individual economic mobility;
• Public colleges educate the vast majority of the nation’s students enrolled in institutions of higher education but private, for-profit schools are growing the most rapidly;

The total number of students enrolled at institutions of higher education increased from under 13 million in 1987 to over 21 million in 2010.

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o Almost 73 percent attend a public college, a broad category that ranges from local two-year community colleges to graduate research institutions.
o Approximately 18 percent attend a private non-profit college, a sector that ranges from research universities to small liberal arts colleges and specialized religious institutions.
o Approximately 9 percent attend a private for-profit (i.e., “proprietary”) institution. Enrollment growth is fastest at for-profit schools, which have increased in size from 200,000 students in the late 1980s to nearly 2 million students today.

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In 2011, an estimated 40 percent of the population 25 years and older had a two-year or four-year college degree. Among young adults age 25 to 34, the fraction of college graduates is slightly higher (43 percent). The fraction of college graduates differs across racial groups and between men and women (see Figure 3). African-Americans and Latinos complete college (associate’s degree or higher) at much lower rates (28 percent and 20 percent, respectively) than whites (46 percent) and Asians (62 percent). Today, young women are more likely to be college-educated than young men. Among 25 to 34 year olds, 27 percent of men attended college but have less than a four-year degree, as compared to 31 percent of women. The gender differential is even larger among college graduates; 29 percent of men aged 25-34 have at least a bachelor’s degree, compared to 37 percent of women in this age range.

College Educated Workers Have Higher Expected Earnings 

• There is substantial evidence that education raises earnings. The median weekly earnings of a full-time, bachelor’s degree holder in 2011 were 64 percent higher than those of a high school graduate ($1,053 compared to $638).

o The earnings differential grew steadily throughout the 1980s and 1990s. Recent evidence suggests that the earnings differential observed today is higher than it has ever been since 1915, which is also the earliest year for which there are estimates of the college wage gap.
o Moreover, the earnings differential underestimates the economic benefits of higher education since college-educated workers are less likely to be unemployed and more likely to have jobs that provide additional non-wage compensation (e.g., paid vacation, employer-provided health insurance).

•  Higher education is important for intergenerational mobility. Without a college degree, children born in the bottom income quintile have a 45 percent chance of remaining there as adults. With a degree, they have less than a 20 percent chance of staying in the bottom quintile of the income distribution and a roughly equal chance of ending up in any of the higher income quintiles.

Choosen excerpts by Job Market Monitor from

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via The Economic Case for Higher Education 

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