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Whether Americans prospered during the longest economic expansion in modern history depends largely on their level of education.
A new survey finds those with college degrees benefited the most from a decade of falling unemployment, rising stock prices, and increasing home values. But many who attended college without completing their degree perceive themselves as being worse off than those who never went.
Credible’s survey of 1,085 adults 25 and older found that only 40% of Americans are satisfied with their finances. But having a college degree greatly increased the odds of achieving long-term financial goals such as landing a better job, saving for retirement, buying a house, and maintaining health coverage.
Among the 52% who said they achieved their financial goals for the decade, job skills and work experience, plus education, were seen as the biggest factors, followed by the strength of the economy.
Among those who fell short of their goals, bad spending habits, the economy and health issues were identified as the main stumbling blocks.
Getting ahead in the ‘college economy’
After hitting a high of 10% in the wake of the financial crisis and Great Recession of 2007-09, unemployment fell to the mid-3s by the end of 2019. But according to a Georgetown University study, 2008 marked the beginning of the “college economy.” Since then, most “good jobs” have been claimed by workers with at least a bachelor’s degree.
These days, going to college usually means taking on student loan debt. For those who get an earnings boost from their degree, Credible’s survey showed that student loan debt can represent an investment in the future.
Compared to someone with a high school diploma or less, during the last 10 years, a person with a bachelor’s degree or higher was:
- 71% more likely to have saved for retirement
- 58% more likely to have maintained health coverage
- 31% more likely to have received a promotion, raise or better job
But for those who don’t complete their degree — or take on debt that greatly exceeds their annual earnings — education debt can be a burden. College dropouts often have trouble repaying their student loans, since their job prospects and earnings don’t improve as dramatically as those who finish school.
Those with only some college were 38% more likely to be dissatisfied with their finances than those with a high school diploma or less, and 47% more likely to express dissatisfaction than college graduates.
Home ownership as a path to wealth
Home ownership remains a primary wealth-building tool for Americans. Although millions lost their homes in the housing meltdown and financial crisis of 2007-08, falling home prices created investment opportunities in the 2010s.
National home prices are up 39% since January 2010, with substantially bigger gains in many regional markets. With mortgage rates not far above historic lows, many homeowners have been carefully managing their debt by refinancing at lower interest rates.
In addition to being 88% more likely to have purchased a home in the last decade, college degree holders were nearly twice as likely to have a mortgage than those with only a high school degree or less.
Education opens the door to investing
Like homeowners, many stock market investors also took a hit in the 2007-08 financial crisis. But since hitting a low in early 2009, the S&P 500 index is up 194% during the 2010s. Whether or not you benefited from the stock market boom depended in part on your level of education.
Credible’s survey found that:
- Those with a bachelor’s degree or higher were nearly three times as likely to own stocks or bonds than those with a high school diploma or less
- Nearly three out of four college graduates (69%) have retirement savings, compared to 39% of those with a high school education or less
- Only 12% of those with a high school diploma or less have money stashed away in a savings account, compared to 39% of college grads
- People with a high school diploma or less were more than three times as likely to have no investments at all than college grads
Paths to financial success
Saving for retirement, furthering your career, and maintaining health coverage were the three long-term financial goals cited as being the most important by all those surveyed. Less than half were able to accomplish all three goals over the last decade:
- Saved for retirement: 45%
- Got a promotion, raise or better job: 43%
- Maintained health coverage: 61%
Those who achieved their financial goals for the decade said the three most important factors to their success were:
- Job skills and work experience: 66%
- Education: 49%
- The strong U.S. economy: 28%
Derailed by bad spending habits and debt
Among those who didn’t achieve their goals, the three factors most often cited as obstacles were:
- Bad spending habits: 43%
- The economy: 29%
- Health issues: 24%
Those who did not achieve their financial goals were more likely to hold certain kinds of debt than those who did. They were:
- 39% more likely to have credit card debt
- 67% more likely to have student loans
- 121% more likely to have medical bills
- 100% more likely to have unpaid taxes
Variations by region
Credible’s survey also revealed some interesting variations in attitudes and outlook by region.
Residents of the Middle Atlantic states of New York, Pennsylvania, and New Jersey are the most satisfied with their current financial situation.
But confidence in the future is highest in the Southeastern U.S., particularly the East South Central census division states of Kentucky, Tennessee, Alabama, and Mississippi.
Complete survey results
Q1. Long-term financial goals
Q2. Most important financial goal accomplished
Q3. Greatest financial regrets
Q4. Single greatest financial regret
Q5. Did you accomplish your financial goals?
Q6. (If yes) What helped you accomplish your goals?
Q7. (If no) What factors prevented you from accomplishing your financial goals?
Q8. Types of debt
Q9. Types of investments
Q10. How satisfied or dissatisfied are you with your finances?
Q11. How confident are you that the next 10 years will be prosperous for you?
Q12. Highest level of education
Q13. Family income
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