Is Going to College Worthwhile? Based on a New Study, It Depends

Updated

We've all heard the adage that if we want a good job, we have to go to college first. In the past -- and when I say "the past," I mean two decades ago or longer -- getting a college degree did generally mean a well-paying job awaited you, and that companies would be waiting with open arms to welcome you into the workforce once you graduated. Nowadays, with online and community colleges popping up everywhere, it appears that as many people are in college because they lack direction as those that are seriously focusing on getting a specialized degree.

Source: Sakeeb Sabakka, Flickr.

With college costs rising at what seems to be an exponential level over the past decade, the question of whether or not college is right for everyone has become all too common. For certain degrees -- lawyers, doctors, and so on -- there is no choice; go to college, or look for another job. For many other jobs, though, a college education is turning out to be not nearly as pertinent.

Do you need a college degree at your job?
A Gallup poll conducted earlier this week aimed at the heart of this question by asking 1,039 full- and part-time workers their assessment of whether or not their job requires a college degree. The results were interesting to say the least.

Does the type of work you do require a college degree?

Yes, degree required

No, degree not required

No opinion

August 2013

43%

57%

< 0.5%

August 2005

43%

57%

< 0.5%

August 2002

38%

61%

1%


Source: Gallup.

As you can see from the most recent poll, more respondents did state, relative to 11 years ago, that a college degree was pertinent to their job. However, in the grand scheme, nearly 6-in-10 job-holders assessed that their job should not require a college degree.

But, as you might imagine, there's a catch.

The catch is that the emphasis of college importance is based on the type of job an individual hopes to gain (or already has) once out of college. When breaking down the respondents into certain job types, the results look something like this:

Does the type of work you do require a college degree?

Yes, degree required

No, degree not required

Professional / Executive / Managerial

67%

33%

Other white collar

50%

49%

Blue collar

18%

81%

Source: Gallup.

As you might suspect, jobs of high responsibility, company leaders, and highly specialized jobs often require a college degree based on the assessment of current employees. For those not in that position, four out of five jobs do not require a degree, according to current workers!

Why the big gap? Well, technology has played role in closing the need for specialization in a lot of industries. Automated production lines and cloud-based software capable of managing inventory and handling accounting are just two examples where technological improvements are displacing the need for a higher education.

Investing implications
The most obvious beneficiaries here are state universities. Clearly, high-level colleges that cater to specific areas of specialized study remain in high demand and will continue to be worth every penny no matter how overpriced they may seem. So when you exit college $200,000 in debt with a degree in neurosurgery, understand that it was worth it!

However, the losers of the bunch look like for-profit educators. Companies like Apollo Group with its University of Phoenix, DeVry , Washington Post with Kaplan University, Bridgepoint Education with Ashford University, and even to some extent ITT Education Services would all seem vulnerable to the college negativity surrounding this survey.

That's bad news, because the entire for-profit education sector is already in hot water with U.S. regulators for its questionable lending practices and marketing tactics dating back nearly three years. For-profit colleges now need to follow strict guidelines when it comes to lending to students, ensuring they don't overburden students with debts that will never be repaid. They also have to be careful not to overpromise on what results students can expect on the job front after completing their online or university education. In general, these colleges offer specialized blue-collar or entry-level training that, in some cases, can be handled on the job with no degree. Therefore, the prospect of paying up to $20,000 or more for a degree versus simply getting a job in the real world without a degree may not be worth it.

As we've seen in recent years, a number of people are choosing to pass up technical colleges in favor of getting a job or biding their time until they're accepted into a state college. Enrollment figures among for-profit educators have been dismal for the most part, with Apollo Group reporting a 15% decline in student enrollment in 2012, and DeVry also noting a trend that worsened by mid-2012 to a decline in new student enrollment of 14%.

Until there's a clearly defined trend that technical colleges are once again a requirement in the workforce, and that the value/income potential trade-off is worth it, the for-profit education sector will remain a volatile, and probably off-limits investment.

With so many ongoing question marks surrounding the for-profit sector, let this latest Gallup survey serve as a reminder that solid companies selling at depressed prices are what have consistently helped generations of the world's most successful investors preserve capital, minimize risk, and achieve long-term, market-trampling returns. If you'd like to find out about one such company, read our free report: "The One REMARKABLE Stock to Own Now." Just click here to get started.


The article Is Going to College Worthwhile? Based on a New Study, It Depends originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Bridgepoint Education. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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