In a 2014 report by The New York Federal Reserve, it is argued that a college degree is at an all-time high. However, that argument comes with a couple of important caveats. We are strong advocates for the value of a college education and also encourage parents to understand to not invest blindly in all forms of higher education.
Researchers at the New York Federal Reserve looked through their data, adjusted for inflation and noted that the value of a degree is at an all-time high.
screenshot from Liberty Street/NY Fed
But, they also noted that wages for college grads are slipping–probably something that your recent college graduate is quite cognizant of. (Falling wages, once accounting for inflation, across the economy is a 30+ year trend, so it is important to be aware of this fact). So, how is the value of college at an all-time high? Because wages of students with only a high school education have fallen so precipitously over the previous years, the opportunity cost of not going to college has set a record. The researchers at the New York Federal Reserve consider this gap to be the “value of college.”
Of course, in some ways, that’s an odd definition of the value of college. College has other benefits, like its correlated impacts on happiness, health and family life. Considering the value of college only against a high school education is somewhat miseleading. The value of college, in terms of wages and in relation to previous years of wages for those with college degrees, is falling. However, because the alternative of not going to college is at such a dangerous low, college is, in one sense, more valuable than ever. And, surprisingly, recouping the cost if a bachelor’s degree doesn’t take, on average, as long as you might think.
screenshot from Liberty Street/NY Fed
Nevertheless, the New York Federal Reserve authors are aware of how strange this definition is. To clarify their claims, they will work on future posts which express caveats on the value of college. Included will be a note on graduating in five or six years instead of four (which can vastly undercut the value of a degree due to higher debt), wage distributions for certain college graduates, as well as other wage trends.
Be prudent in your analysis of the value of a college degree. All degrees and all majors are not equal and this data helps illustrate the complexity involve.
