The Declining Value of College Degrees

Relaxing your college education requirements could be the key to boosting diversity.

Has that college degree lost its luster amid the unprecedented job market? 

The answer may increasingly be yes. 

Tesla, Amazon, IBM and Google have all eliminated college education as a requirement for many entry-level jobs, and wide swaths of the banking and technology sectors have virtually eliminated degree requirements for many core positions, says Bill Catlette, an executive coach in Memphis who specializes in workforce training.  

“There’s been a long held bias about college degrees and that these candidates went to college, paid a lot of money and paid their dues,” says Stacie Haller, career expert at ResumeBuilder, an online resource for job seekers. “But the barriers are coming down because employers are desperate for top talent.”

Meanwhile, new grads are finding their degrees worth far less than they may have thought: As new 2021 and 2022 graduates seek employment, 34% of them said they could have gotten their jobs without a college degree, according to a recent survey by ResumeBuilder.

Credit COVID-19 for the educational shift, says Haller. The pandemic prompted people to stop and take a look at their careers and life, and as jobs shifted to be remote with flexible hours, it opened up the competition for talent. As a result, employers began loosening educational requirements to grab top talent, she says.

More than a half a million students also dropped out after the pandemic, with some citing mental health challenges. Enrollments in colleges, universities and trade schools fell by 4.1% during the spring semester and by more than 7% over the past two years, according to the National Student Clearinghouse Research Center. 

“With the current economy and rising inflation, college grads are anxious to get to work, move out of their parents’ homes, and start their lives,” says Haller.

The shift comes amid rising tuition costs—three times as high in inflation-adjusted dollars as in 1988—and $1.7 trillion in student loan debt owed by 45 million Americans. Four out of five college students expect to have college loan debt when they graduate, prompting as many as 60% of them to expect that they’ll live at home after getting their first job for the first year or two. 

“People are looking at their student debt, and they’re saying, ‘Why did I even go to school here? Was it worth the money?’” says Josh Bersin, CEO of the Josh Bersin Company, which analyzes talent market and trends impacting global workforces. “The education system has been somewhat of a monopoly, and today many students have not seen a good return on their investment.”

Jobs and technology are changing so fast that colleges often can’t keep up, so people graduate from school and still need to learn a lot on the job, he says. The skills for a marketing job today, for instance, look far different than five years ago. Much of the college-delivered knowledge base has been subsumed by inexpensive, readily consumed via webinars, YouTube, learning sites like Udemy, and certificate programs.

“As many as 1.4 million students are trading a 4-year cap and gown experience for a bird in the hand,” says Catlette. “And many university executives appear as deer in the headlights.”

Relaxing education requirements removes barriers to diversity. 

Employers may find that by relaxing the hiring requirement for a college education, they can improve their organization’s diversity.  

“So many companies really need to step up their game with diversity, equity, inclusion, and belonging,” says Scott Zimmer, a director of keynotes and training at Bridgeworks, a Minnesota generational research and consulting firm. By reducing educational requirements, companies can significantly broaden their hiring pool. 

White men, for instance, earn engineering degrees at 11 times the rate of Black women. About a third of white people obtained a college degree or more, compared to 21% of Black people and 15% of Hispanic people. 

“If you are insisting on a college degree, you are actively stacking your recruitment process against people of color,” wrote Karla Reffold, chief operating officer at Orpheus Cyber, a cyber intelligence firm, in a 2020 Forbes piece. 

Specifically, a company will screen out about 70% of African-Americans, 80% of Latino-Latina workers and 80% of rural Americans of all races, economist Byron Auguste told NPR last year. He served as deputy director of the National Economic Council in the Obama administration and now is the CEO of Opportunity@Work.

IBM, for instance, removed its requirement for degrees a number of years ago to open up tech careers to more people and close the skills and opportunity gap.  More than half of its U.S. job openings don’t require a bachelor’s degree. 

“We’re working on getting that number even higher,” says Laurie Friedman, an IBM spokeswoman. By focusing on skills and “new collar” jobs, she says, IBM intends to shift mindsets and make tech more diverse and inclusive. 

The majority of HR leaders (57%) say their learning and development budgets increased following the pandemic. And an even higher percentage (67%) said they planned to raise their budgets for 2022, according to recent data from learning tech pioneer Epignosis and Society of Human Resources Management. 

Employers are also getting better at looking at “skills adjacencies,” which can be a better signal than a degree for who will excel at a job. Take, for instance, a firm looking for a cybersecurity specialist. Instead of a degree, an employer might look at whether someone knows math or excels at puzzles.

A smart leader could identify that person in marketing who’s excelling at advertising analytics that might make a great cybersecurity manager. Now, an army of people in HR are trying to figure out how to do this “skills adjacencies” at scale.

“College is more or less a signal that at least you have enough brainpower to get through college,” says Bersin, “but it doesn’t tell you that much about what you’re going to be good at.”

The dream jobs haven’t come.

At least one in five recent grads are working at jobs that are unrelated to their major, according to the ResumeBuilder survey. Forty-three percent of graduates from associate degree programs are working at jobs they could have gotten with a high school diploma or less. 

Those with bachelor’s degrees are doing better, but 40% of them have jobs for which those with associate’s degree, high school diploma, or no specific education at all would also qualify for. Their jobs, too, aren’t necessarily letting them use their new degrees to their best advantage, according to CareerBuilder.

Some of that may be due to the fact many young people haven’t been coached on how to appeal to employers, refine their resumes and excel in an interview, says Haller. “They have a picture on LinkedIn where they’re holding a drink on a beach. I’ve seen all of that,” she says.

Grads who nabbed jobs related to their majors studied film and television (79%), healthcare (78%), business (78%), technology (76%), and finance (75%). But only 38% humanities, liberal arts, or foreign language graduates work in their respective fields and only 53% of those with social sciences degrees.

The rise and fall of a diploma’s value.

A college education still holds weight in some arenas. If you get an accounting degree and you want to be an accountant, then an entry level job with a degree will get you a better position and more money than if you didn’t have a degree, says Haller. “But they might hire you without a degree, but you’re probably not going to move far until you have advanced education specifically for that,” she says.

For decades, a college education was an important part of your resume. When companies like Google and others started using college degrees as criteria, there was a rush to get a computer science degree from a well known institution. Today that trend has shifted, and now companies want people with brain power and experience. 

“HR leaders are fessing up to the fact that, in many cases, degree requirements were unnecessarily strapped onto a lot of jobs decades ago simply because doing so drew more mature candidates and a higher starting salary, which made recruiting considerably easier for them,” says Catlette.

Employers also often believed that a college education gave candidates “soft skills,” such as writing, communication and computer skills. And while this is true, many Gen Zers already excel in their technical abilities, even without a college education, says Zimmer.

With the onset of a digital talent shortage, employers began looking well beyond graduates from top schools, and by the mid early ‘90s, employers realized they could find great candidates in other places. 

“I’ve never looked at pedigree or what school a candidate went to,” says Robyn Duda, the Atlanta-based CEO and Founder of RDC, a workplace event company. “What kind of human are you? Do you work hard? You know, what kind of work ethic do you have? That’s what really matters.”

True, more employers simply want to know about your skills and experiences. In fact, grit and perseverance are some of the biggest predictors of success in a job.

University of Pennsylvania professor Angela Duckworth studied new teachers in rough neighborhoods, military cadets, and new salespeople to determine who would succeed. It turned out that success wasn’t determined by IQ, social intelligence, looks, or health. It was passion and persistence.

Google’s own internal research also indicated that GPAs and test scores didn’t matter. As many as 14% of people on some of its teams never went to college. 

“Success in business has very little relationship to school or what their grade point average was,” says Bersin. “It takes grit, ambition, learning agility, and experience.”