College Still Pays Off Abundantly
Researchers at the Federal Reserve Bank of San Francisco have produced an excellent, brief and readable analysis that concludes that “the value of college is high and not declining over time.” For most students, “tuition costs… can be recouped by age 40, after which college graduates continue to earn a return on their investment in the form of higher lifetime wages.”
Other researchers have come to the same conclusions, but the advantage of this new study is that it is based on Michigan University’s Panel Study of Income Dynamics — the nation’s longest-running longitudinal study, which began in 1968. To avoid the confounding effects of a post-graduate education, the study compares individuals with a Bachelor’s degree only against those with a high school diploma only.
By this comparison, a Bachelor’s degree has continued to reap a rich reward for more than 40 years. Even at the lowest point (1980), college graduates earned 43 percent more than their high school-educated counterparts. Over the entire four-decade plus period, the average payoff was 57 percent more per year (more than $20,000 annually).
The authors also examined three cohorts of college graduates separately (1950s-60s, 1970s-80s, and 1990s-2000s), to ascertain generational experiences. The first two cohorts’ experiences were remarkably similar, but the most recent cohort fared even better than the previous two once they had been in the labor market for more than 5 years. The college advantage also rises over one’s lifetime, a finding that replicates previous research.
See ”Is It Still Worth Going to College?” The study includes a link to a “tuition calculator” that will allow individuals to calculate the number of years after which their own earnings can be expected to exceed their college investment (see p. 4).
A related commentary from the Brookings Institution examines work by two private sector organizations that attempt to measure the payoff to attendance at individual postsecondary institutions. The author concludes that the Federal government should take the lead to link administrative data on education and earnings. See How Well Does College Pay?
Modified On : May 08, 2014
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