Going to college still pays off — mostly.
With high college costs and a rising number of alternatives to a four-year degree, questions about the financial return of a college degree have been rampant. The New York Federal Reserve released new data on Wednesday showing that college does still typically pay for itself, but it depends on the student’s choices.
“The typical college graduate earns a return that easily surpasses the benchmark for a sound investment,” the New York Fed’s blog post said. However, some college students don’t fall into that category.
The New York Fed found that the rate of return on a college degree remains high, and college graduates continue to earn more than those who do not earn a college degree. Using data from the Census Bureau adjusted for inflation, the Fed found that the median college graduate with just a college degree earned about $80,000, compared to $47,000 for a worker with just a high school diploma.
“With the annual college wage premium at more than $30,000, it is easy to see why the return to college remains so substantial,” the blog post said. “Over an entire working life of more than forty years, such a premium adds up to a benefit well in excess of the costs.”
There are some students, however, who might not see that premium. A companion blog post from the New York Fed highlighted three reasons a college degree might not pay off for some students:
- Taking more than four years to complete the degree;
- Picking a low-paying college major;
- Choosing to live on campus.
The blog post said that while most students complete their degrees in four years, “taking an extra year or two to finish school adds considerably to the cost,” primarily because of the opportunity costs of staying longer in school and missing out on wages that could’ve been earned through working full-time.
The total cost of college increases from $180,000 to $272,000 when students graduate in five years, the blog post said, based on data from the Census and Department of Education.
Additionally, graduates in certain majors tend to earn more post-graduation than others; those in engineering, math, and economics typically have a higher return on investment, but the New York Fed said that a degree generally pays off regardless of major.
The higher cost of living on college campuses can also decrease the return on investment for some students, depending on the amount of additional financial aid they receive.
Some with college degrees have found even more benefits beyond the financial; a report from the Lumina Foundation said that it allows for greater career stability, more community involvement and civic engagement, and enhanced retirement security.
The College Board found last year that, amid concerns about higher education costs, the cost of college had actually been going down. That’s due to a few factors, including an increase in grant aid and a decrease in student-loan borrowing.
That’s not to say students aren’t feeling the financial bind of a degree; some Gen Zers previously told BI that they did not want to take out student loans when they felt they could further their careers by directly entering the workforce.
President Donald Trump’s education secretary, Linda McMahon, also said that one of her aims while on the job is to strengthen and expand alternative routes to a college degree; part of her “final mission” during Trump’s goal to eliminate the Department of Education.
Are you considering whether college is worth it for you? Share your story with this reporter at asheffey@businessinsider.com.
