Is It Still Worth Going to College?
“College is still worth it” may very well be the best way of describing the catchiest of current catchphrases in higher education research. But, as parents are sending in deposit checks to schools, it’s good to remember some of the economic justification of a college degree. Spoiler alert, parents: “college is still worth it” is one phrase that continues to hold true.
In the most recent release of Federal Reserve Bank of San Francisco’s Economic Letter, an article discusses why a college degree is worth the investment. The focus is on earnings premiums–specifically, the difference between average earnings power–of students whose final degree is a high school diploma versus students who have graduated from college. in line with conclusions of other organizations’ previous reports, the Federal Reserve determined that there remains a significant difference in earnings power of college students. Specifically, college graduates project to make $800,000 more in their respective lifetimes when compared to their high school counterparts.
Due to the rapid increase in college costs, some doubt on the size of the earnings premium has arisen in the past few years. However, the Federal Reserve indicates that students who pay $20,000 a year in tuition would pull even if lifetime earnings with a high school graduate around or before age 40. Thereafter, college graduates would expect to make an extra $28,650 per year, which would accumulate to more than $800,000 by a social-security-eligible retirement at age 67.
The best parting words on this issue (other than reiterating the phrase, “college is worth it.”) are from the authors in the report:
Although there are stories of people who skipped college and achieved financial success, for most Americans the path to higher future earnings involves a four-year college degree. We show that the value of a college degree remains high, and the average college graduate can recover the costs of attending in less than 20 years. Once the investment is paid for, it continues to pay dividends through the rest of the worker’s life, leaving college graduates with substantially higher lifetime earnings than their peers with a high school degree. These findings suggest that redoubling the efforts to make college more accessible would be time and money well spent.