It might be the hottest question in higher education today: Is a college degree still worth its cost? Despite soaring tuitions, a new study from the Federal Reserve Bank of San Francisco finds, the general answer is yes: The average U.S. college graduate can expect to earn at least $800,000 more than the average high school graduate over a lifetime. Not surprisingly, the so-called earnings premium that a college degree bestows increases with each additional year out from graduation.
Using U.S. survey data on income, the Fed study finds that a college student who pays $21,200 or less in annual tuition (some 90 percent of students at public four-year colleges and 20 percent of those at private nonprofit institutions) can expect to recoup that investment by age 38. After that, the extra income they make from their earnings premium is a net gain. "Tuition amounts lower than our estimate make going to college strictly better in terms of earnings than not going to college," the study's authors write.
Of course, to say that college is always worth what it costs oversimplifies the issue. The college-grad earnings premium has grown recently more because wages for high school grads have stagnated than because pay for college grads is on the rise. A PayScale ranking of America's colleges and universities done earlier this year also identified almost two dozen schools that actually make their students poorer—in other words, programs where the earning power granted by the degree doesn't justify the cost of tuition. And as my colleague Jordan Weissmann notes in the post linked above, there are also many other schools where the return on investment is so low that students would be better off putting their money in the stock market.
TODAY IN SLATE
Don’t Worry, Obama Isn’t Sending U.S. Troops to Fight ISIS
But the next president might.
The Extraordinary Amicus Brief That Attempts to Explain the Wu-Tang Clan to the Supreme Court Justices
Amazon Is Officially a Gadget Company. Here Are Its Six New Devices.
The Human Need to Find Connections in Everything
It’s the source of creativity and delusions. It can harm us more than it helps us.
How Much Should You Loathe NFL Commissioner Roger Goodell?
Here are the facts.
The Plight of the Pre-Legalization Marijuana Offender
What should happen to weed users and dealers busted before the stuff was legal?