Fed Reserve Bank (San Francisco ) Ask: Is It Still Worth Going to College?

In today’s Federal Reserve Bank (San Francisco) Economic Letter, the value of a 4 years university/college degree is questioned, and findings are rather shocking : it will take 15 to 20 years in order to return the investment on average.

Table 1 Maximum tuitions by breakeven age and discount rates

Maximum tuitions by breakeven age and discount rates

The article concluded:

Earning a four-year college degree remains a worthwhile investment for the average student. Data from U.S. workers show that the benefits of college in terms of higher earnings far outweigh the costs of a degree, measured as tuition plus wages lost while attending school. The average college graduate paying annual tuition of about $20,000 can recoup the costs of schooling by age 40. After that, the difference between earnings continues such that the average college graduate earns over $800,000 more than the average high school graduate by retirement age.

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.