Greater transparency about higher education is needed for America’s families, as they make decisions about where students will go to college. That is why Vassar accepted the White House’s invitation last year to be among the first 10 colleges and universities to adopt the “Financial Aid Shopping Sheet,” a standardized summary with clear information on tuition and grant aid, as well as likely loan burdens and graduation rates.
However, the latest calls to provide additional information to families — like adding graduates’ salary data to the College Scorecard that President Obama mentioned in his State of the Union address — should be met with concern.
Like the shopping sheet and the Student Right to Know Before You Go Act, proposed by Senator Ron Wyden, Democrat of Oregon, and Senator Marco Rubio, Republican of Florida, the College Scorecard stems from good intentions.
We can all agree that college applicants and their families need to make informed college choices. Yet I am among many economists who would suggest that taking a short view of what college graduates earn early on in the job market is troubling for several reasons.
First Job May Not Predict Lifetime Earnings
What a graduate earns soon after college, or even five years out, is not always a good indicator of what he or she will earn over a lifetime. Different professions have different earnings profiles over time, and students and their families should really care about lifetime earnings, not the salary of their first job.
Professions Are Changing, Evolving and Disappearing
A student who receives very specific training during college may have greater success at getting that first job, but may in fact be more vulnerable over time compared to a student with a more general education.
The nature of the labor market has changed radically over the last several decades. While there was a time in the past when people took a job and stayed with that firm for their lifetimes, these days, people don’t even stay in the same professions — much less jobs — for most of their careers, because those professions are changing, evolving and in some cases disappearing at rapid rates.
Being nimble intellectually and able to learn new things is more important to success in the labor market now than ever before. So, training to be an “X” may get you a first job right after graduation, but those jobs may disappear for several reasons, from technological innovation to outsourcing.
Some Students Go Straight to Graduate School, Not Work
Postgraduate work has always been important in terms of success in the labor market. Unless supplemented with data on success of getting into graduate programs, earnings data for particular schools soon after graduation will be misleading.
Colleges and universities that successfully send students on to the best graduate schools, including medical school, business school, law school and other graduate schools including Ph.D. programs, will have graduates who aren’t earning much after one to five years out of college, but will have very favorable job prospects and earnings expectations further out in their careers.
Earnings Are Not Everything
Some people will decide that they are willing to forgo higher earnings to do something that brings them satisfaction. One’s work is not just a means to an income, but a source of satisfaction.
If one school is particularly effective at and has a tradition of educating artists while another has been very successful at producing investment bankers, differences in earnings do not reflect on the relative quality or value of the educations offered.
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