A little Motivation // One Day It Will All Make Sense

an article posted by Larry Swisher at BNA explains a new study by Brookings that highlights the benefits of college as outweighing the cost of tuition.  

Although college tuition has increased dramatically during the past 30 years, the benefits of a college education in terms of lifetime earnings also have continued to grow, according to an analysis released Oct. 5 by the Brookings Institution’s Hamilton Project.

“In most respects, a college degree has never been more valuable,” Adam Looney, Hamilton Project policy director, and Michael Greenstone, director, said in the report.

The study compared rising tuition costs over the past three decades to trends in earnings of workers with a bachelor’s or higher degree and those with only a high school education.

Although average tuition and fees at public and private colleges, excluding room and board, have risen 46 percent since 1980, the earnings difference between recent college graduates and high school graduates their age has grown 75 percent over the same period, the analysis found, based on data from the Census Bureau and the Department of Education.

$12,127 Per Year Premium

In 2010, workers ages 23 to 25 with college degrees earned an average of $29,164, or $12,127 more than the $17,036 earned by their peers with a high school but no higher education, according to the report.

In 1980, by comparison, the college earnings premium was only $4,578 in inflation-adjusted dollars.

In addition, recent college graduates in 2010 were nearly 20 times more likely to be employed than other young adults with only a high school diploma, the report’s authors said.

“While rising student debt and payments to colleges are a cause for concern, we have found that college is still one of the best investments an individual can make,” they said.

The authors said government has a role to play in ensuring all students have access to college by means of “a commitment to making it financially feasible at all income levels and a productive K-12 system that prepares students for the next level of education.”

Lifetime ‘Rate of Return’ Still High

The study said the claim that college is no longer a sound investment is not supported by the facts and that the lifetime financial benefits of a college degree have increased dramatically over the past three decades.

Even after accounting for the costs of a four-year college education, a student entering college in 1980 could expect to earn about $260,289 more over the course of a 42-year career than someone with only a high school diploma, according to the analysis.

In 2010, a college student’s expected lifetime earnings premium relative to a high school graduate was $455,614.

The estimates are inflation-adjusted after subtracting the full cost of tuition and fees for four years and the earnings foregone while attending college.

“In short, the cost of college is growing, but the benefits of college—and, by extension, the cost of not going to college—are growing even faster,” the report concluded.

The Hamilton Project estimated that investing in a four-year college degree would yield a return of 15.8 percent in 2010. Although that is less than the peak rate of return of 17.8 percent in 1998, the rate has remained fairly constant over the past three decades, it found.

“If attending college was a good idea in the ‘80s, it’s still a good idea today,” the report’s authors said.


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