Home' Trinidad and Tobago Guardian : September 7th 2014 Contents SEPTEMBER 7 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
COMMENTARY | SBG19
As the cost of a college edu-
cation continues to soar and
consistently outpaces the
rate of inflation, many won-
der if the value of higher
education is overrated. But
college graduates still enjoy a sizeable earnings
advantage, better earning potential and greater
Young people starting out in any industry
can expect to face a difficult job market, par-
ticularly in today s economic environment.
However, a recent study by the Pew Charitable
Trust shows that following the last recession,
college graduates fared far better than high
school graduates, experiencing less unem-
ployment and more stable salaries.
While the study does not factor in the cost
of attending college, it does indicate that
although the job market is difficult for young
people, a college degree can greatly enhance
Another study by the Lumina Foundation
and Georgetown University reports that since
the recovery began, the economy has added
two million jobs for workers with a bachelor s
degree, while nearly six million high school
diploma-only jobs have been lost.
The results reported indicate that, following
the recession, the divide between college-edu-
cated workers and those with a high school
degree has never been greater. Statistics from
the study reveal that the unemployment rate
for college graduates is 4.5 per cent, while
those with a high school diploma are expe-
riencing a 24 per cent unemployment rate.
A long-term investment in future
Determining the long-term earning potential
of a college degree and the premium it generally
offers over a high school diploma is a calcu-
lation that should take into account lost earn-
ings while in college, the actual cost of college
and debt repayment.
Another Pew Research Center s study offers
an analysis based on Census Bureau data,
which estimates that an adult with a bachelor s
degree will earn an average of US$1.42 million
over a 40-year career, while a high school
graduate will earn US $770,000.
Once the cost of college and lost income is
factored in, the study projects an average earn-
ings premium of US$550,000 for those with
a college degree.
A sizeable earnings premium coupled with
a significantly lower unemployment rate for
college graduates offers a strong case for the
long-term benefits of a college degree.
Additionally, the study indicates that indi-
viduals who have a college degree are more
likely to receive substantial increases in salary
and progress further in their chosen career
compared with those who hold only a high
Tax laws are complex and subject to change.
Morgan Stanley Smith Barney LLC ("Morgan
Stanley"), its affiliates and Morgan Stanley
Financial Advisers and Private Wealth Advisers
do not provide tax or legal advice and are not
"fiduciaries" (under the Internal Revenue Code
or otherwise) with respect to the services or
activities described herein except as otherwise
agreed to in writing by Morgan Stanley. This
material was not intended or written to be
used for the purpose of avoiding tax penalties
that may be imposed on the taxpayer. Indi-
viduals are encouraged to consult their tax
and legal advisors regarding any potential tax
and related consequences of any investments
made under such account.
Investments in a 529 plan are not FDIC-
insured, nor are they deposits of or guaranteed
by a bank or any other entity, so an individual
may lose money.
Investors should review a program disclosure
statement, which contains more information
on investment options, risks factors, fees and
expenses and possible tax consequences.
Investors should read the program disclosure
statement carefully before investing.
Earnings on non-qualified distributions will
be subject to income tax and a 10 per cent
federal income tax penalty State taxes may be
applicable. Before investing, consider whether
tax or other benefits or investments are only
available in your home state 529 college savings
Trinidad Guardian engaged David Fox to
feature this article.
David Fox may only transact business
in states where he is registered or excluded
or exempted from registration Transacting
business, follow-up and individualised
responses involving either effecting or
attempting to effect transactions in secu-
rities, or the rendering of personalised invest-
ment advice for compensation, will not be
made to persons in states where David
Fox is not registered or excluded or exempt
© 2014 Morgan Stanley Smith Barney
LLC. Member SIPC.
Article Written By: Wealth Management
Courtesy of: David H Fox, CFP, Senior
Vice President, Financial Adviser
CRC 914584 (05/14)
Still a good investment
DAVID H FOX
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