One of the hardest choices I’ve had to make in my life (only 18 years of it) thus far is picking a college to attend this fall. For many, like myself, a college degree is a must. However, others should think twice before investing in higher education. In many parts of the world, the price of higher education is rising. Between 1968 and 2008, the tuition net fees rose in America from $213,000 to $590,000 for men, and from $129,000 to $370,000 for women (est. 2009). In America and Europe, unemployment rates for graduates are far below average. The demand for graduates varies slightly from country to country.
According to OECD, a club of mainly rich countries, older Americans are much educated than everyone else in the in the rich world. However, the rest of the rich world are catching up. In Europe, the growth of new graduates was so fast that it was combined with generous minimum wages to keep the college wage premium relatively flat. Some of the college wage premium reflects the rising importance of postgraduate study as the college premium in America ranges from 125% for engineering graduates, for whom demand seems endless, to 40% for students of psychology or social work.
It is, therefore, safe to assume that college remains a worthwhile investment when looking purely at labor market returns. However, the current labor market seems to reward degrees in the STEM fields more handsomely than those in the social sciences. As a result, aspiring college students should seriously factor in their prospective area(s) of study when making a college investment.