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MARGIN NOTES

Million-dollar degree, revised upwards

The "earnings premium" of a university degree is now $1.3 million, on average, compared to a high school education.

By LÉO CHARBONNEAU | AUG 31 2010

It’s back to school for students next week and the start of a new academic year. The Association of Universities and Colleges of Canada is marking the occasion with a new advocacy piece on the value of a university degree.

AUCC has long maintained that the earnings premium of a university degree is about $1 million over a lifetime compared to a high-school education. Similar claims have been made in the U.S., although some there feel that as the cost of education has risen, the earnings premium has declined.

So what does AUCC have to say now? In a new pamphlet and on its website, the association not only maintains the existence of an earnings premium, but has revised it upwards: the holder of a university degree can now expect $1.3 million in greater income over a career, on average, than someone with just a high school education. “A university degree has never been more valuable,” says the association.

And for those who may believe that the earnings differential has narrowed between a university degree and a college diploma or trade school qualification, that just isn’t so, AUCC says. “For example,” says the association, “in 1980, the earnings advantage for male bachelor’s graduates was 37 percent. By 2005, the earnings advantage had grown to 50 percent. Census data show a much smaller premium for college or trade school graduates – approximately 7 percent in 1980 and about 15 percent in 2005.”

What’s more, the association says a degree contributes to “marketable, adaptable” career skills, greater opportunities for advancement and fewer periods of employment.

A report by the C.D. Howe Institute, released last week, looks at the issue from a somewhat different perspective, but comes to similar conclusions. A good summary of the report can be seen here.

I should also note that a 2009 report by the now defunct Canada Millennium Scholarship Foundation made a similar argument about the value of a degree, but pegged the earnings premium at just under $750,000 over 40 years.

AUCC is planning two additional brochures in the next few months: one on the value of a degree for Aboriginal youth and another on the value of a Canadian degree for international students. It also plans to release a new report on enrolment early next year as part of its Trends in Higher Education series.

ABOUT LÉO CHARBONNEAU
Léo Charbonneau
Léo Charbonneau has been the deputy editor of University Affairs since 2003. He started the Margin Notes blog in 2009 and it has gone on to win several awards, including Best Blog at the Canadian Online Publishing Awards.
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