Despite the exams, stress and tuition fees, college certainly pays off, according to one managing director at Bank of America Merrill Lynch (BAML).
"(A) four year college degree is a better investment for you personally than investing in the stock market," Sarj Nahal, managing director and head of thematic investing at BAML told CNBC, discussing the bank's latest "Let's Get Smart" report.
According to Nahal, education imbalance is the "biggest civil rights issue of our era." Placing the issue in perspective, Nahal said that "eight days' worth of military spending would be the equivalent of educating everybody around the world up to secondary level."
BAML's research revealed that a perceived 100-year education imbalance between developed and emerging markets is incurring a significant loss to the global economy, which could "exacerbate inequality, discontent and unrest." It estimated that $1.8 trillion in global GDP (gross domestic product) will be lost by 2050. A $3 trillion boost would be seen if education for all was to be achieved, Nahal added.
Concerning the benefits of a college education, Nahal said that "at a country level, every dollar invested in education means economic returns of between four to ten dollars for the governmental authorities." He detailed that on a personal level, this equated to a 15 percent return on average.
BAML's data showed that a graduate in the U.S. with a four year college degree under their belt will earn over $1 million during the course of their lifetime more than a high school dropout. For those with maths or science degrees, this figure rises to $1.5 million on average.
BAML's report indicated that there are 263 million children globally who are not in school, as well as 758 million illiterate adults, meaning that there is definitely room for investment. According to Nahal, the global education market is expected to grow to $6.3 trillion by 2020 – it is currently valued at $4.9 trillion.
With regards to strategy, Nahal advised potential investors in the education sector to position themselves in Asia-Pacific emerging markets – notably China and India – which he deemed to be the fastest growing. Nahal explained that they were "stepping up governmental investment as well as household spending."
Nahal also outlined key areas for investment. First was educational technology, which he described as "one of the fastest growing areas." Nahal said that this was growing at 17 percent per year, which equalled $250 billion by the end of this decade. "Only 2 percent of education around the world is actually digital," he said. Other sectors included the "kindergarten through to secondary" stage of education, publishing and content, and student housing and accommodation.
A mismatch in education quality also exists, according to BAML's report. It showed that 50 percent of both employers and students do not feel that education is preparing them for the world of work. Nahal said that the U.S. will witness an imbalance of 2.4 million STEM (science, technology, engineering and mathematics) graduates by 2020, and BAML's report advocates closing this skills gap as automation begins to play a more significant role in today's workforce.
Whilst Nahal admitted that "we have made incredible strides … In terms of the basic building blocks," he emphasized that "there's still a massive way to go."
Indicating that the report's findings ought to provide a wakeup call, Nahal said that "technology is changing our world at a pace that we've never seen before, and we're simply not prepared for it."