Mellody Hobson is president of Ariel investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts. Additionally, she is a regular financial contributor and analyst for CBS news.
Mellody: We are talking college again, tom, but that is because it is so important! Specifically, I want to discuss the question of whether college is worth it. This is something that has been on the minds of many as we have seen college tuition prices rise and student loans burdens rising along with them. But while it is understandable that parents and students might ask this question, I am here to tell you that college is not only worth it, it is a critical step towards increasing lifetime earnings and securing a sound financial future.
Tom: Can you spell this out for us? How much is a degree worth?
Mellody: I have some eye-popping numbers for you, tom. Try this first one on for size: adjusting for the costs of tuition, books, inflation’s impact on wages, the average value of a college degree is $500,000 dollars over a lifetime – and that’s a conservative average! That number has doubled over the past 3 decades. If that doesn’t grab your attention, there’s more! According to the department of labor, Americans with four-year college degrees made 98% more an hour on average in 2013 than people without a degree. That’s up from 89% five years earlier, 85% a decade earlier and 64% in the early 1980s.
It is important to note though that these differences persist even if you have some college but did not graduate. The wages for people who have some college but have not obtained a four year degree — a group that includes community-college graduates — have not been rising. The big economic returns go to people who have obtained a bachelors degree.
Tom: But what if you have student loans or you can’t get a job?
Mellody: You certainly cannot dispute the fact that the economic downturn has been tough on everyone in terms of employment, including college grads. And there are certainly concerns out there about student loan debt – I have spoken about that numerous times on this show. However, among four-year college graduates who took out loans, the average debt is about $25,000. This is a very small fraction of the economic benefits of college. And the unemployment rate in April for people between 25 and 34 years old with a bachelor’s degree was just 3%.
Tom: Does this hold true for minority graduates?
Mellody: Well Tom, the answer to this is multifaceted. In terms of employment rates, a college degree is always a positive factor in your favor. The story here is really about recent graduates, and the difference we see between minorities versus the general population. The unemployment rate for recent black degree holders is almost 10% lower than the black population as a whole, but black graduates are facing an unemployment rate nearly 7% higher than college graduates as a whole. Before the recession, the difference hovered around 3%. Clearly, there is still a lot that needs to be done to ensure that recent minority graduates and recent black graduates in particular, are getting the same advantages from their education as the general populace. However, the data does show that that gap narrows over time, and these differences do not negate the value of a college degree over a lifetime.
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This Week’s Celebrity Instagrams (10/7-10/14)
25 photos Launch gallery
1. Nite | to the tune of @cnn 😞
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2. Got so much work to do but I just wanna stay in bed and binge watch #Gameofthrones and start the new season of #OnceUponATime. I know I can't be the only one. Right? Ha 💤🦁🍂 #saturday
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3. Mommy's weekend turn up ❤️👶🏾💕🍼 Wouldn't trade it for nothing. #TeamNoSleep lol #HesMyBiggestBlessing ✨
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4. One of them oh shit mont we made it feelings … this shit still be unreal 💯💪🏾 @remyboymonty1738
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5. Tickets Available October 14 @ticketmaster.
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6. People magazine Home edition has raided my house! Get a sneak peek into the bedroom life of the Leakes and see other parts of my home now at PEOPLE.COM
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7. They want to kick you when you down, but kick it when you up
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8. Got my advance copy of #Mafia3 at @gamestop. Get yours via link in the bio #Mafia3 #Ad
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9. This is some of the cast and our diverse team of writers in the writer's room creating funny sh*t for @nbcmarlon what a fun room! Lots of jokes, great stories and having a great time doing what we love... making people laugh and feel something. Look out for our show next year @nbcmarlon we bringing sitcoms back to NBC
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10. #HappySunday☀️Thank you @4everbrandy101 💛💡💛
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11. Happy to be back in Central Falls, RI breaking ground for the One Stop Health Center and hosting a local community event with #Vaseline.
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12. Thank you all in advance 💋💋💋 #Repost @urbansvintage・・・#TarajiPHenson's memoir #AroundTheWayGirl will be available everywhere TODAY October 11th! Will you be purchasing a copy? #UrbansVintage
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13. Moms got my back
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14. @galore dinner party glo ✨ thanks to @styledbygiigii
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15. 🌹#ThisIsWhatTheTruthFeelsLikeTOUR #forevereve
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16. Yes, all those videos I've been posting have led to this: the introduction of skincare to @TYRABeauty! This is the rundown on the new line:Years of research and beauty tips I live by led me to produce the most effective and delightful skincare out there. I'm all about taking really good care of my skin, so I can look like I'm aging in #TyraYears and go filter free on Instagram when I feel like it! Now, it's your turn. ✨My Mama always told me not to wash my face with just my hands. "Tyra, girl, you're just moving the dirt around!" And I've listened. First up is The Clean Machine.... ...a 3-in-1 foaming face wash that cleanses, removes makeup and purified your skin. It has patented technology - a attached Turbo Cleansing Tool - to give you that deep clean that makes your skin feel super fresh. Wanna know more? Yeah, baby. Click that link in my bio.
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17. On set of #beingmaryjane like... ❤️😬💃🏾
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18. #carouselofhope@yvetteshelton100@makeupbylatrice @thestacetheface@marialuciahohan24
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19. I refuse to let a little cold stop me from my daily routines to greatness. #onlythestrongsurvive #warriors
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20. Big things begin with big THINKING... #BusinessEthics #SetLife 🎥
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21. Goodnight - here's a song
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22. Words can't explain the feeling that I have right now.....God is good. look momma I made it. #Harts #Blessed #WhatNow #comedicrockstarshit #4DaysAway
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23. I tried to get a better video with out the nasty bib but she started getting mad at me..lol! Big cuz @the_queen_caitlin trying to show her what to do. #MamasToots #HeirBear👑💜
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24. Gorgeous Serena joined Beyoncé in Formation last night on stage in New Jersey!!!
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25. 😜 @lifeofdesiigner & @rockohill
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