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Do the Benefits of College Outweigh the Cost?

In: Business and Management

Submitted By BlakeKirkland
Words 435
Pages 2
In recent years, students have been paying more to attend college and earning less upon graduation—trends that have led many observers to question whether a college education remains a good investment. However, an analysis of the economic returns to college since the 1970s demonstrates that the bene ts of both a bachelor’s degree and an associate’s degree still tend to outweigh the costs, with both degrees earning a return of about 15 percent over the past decade. e return has remained high in spite of rising tuition and falling earnings because the wages of those without a college degree have also been falling, keeping the college wage premium near an all-time high while reducing the opportunity cost of going to school. The sluggish labor market recovery from the Great Recession has refueled the debate about the value of a college degree. Although the unemployment rate of college-educated workers has remained well below average, there is mounting evidence that recent college graduates are struggling to nd good jobs.1 At the same time, college tuition has risen sharply, reaching record highs, and col- lege graduates are increasingly nding themselves saddled with debt from student loans used to nance their education. By the end of 2013, aggregate student loan debt in the United States exceeded $1 trillion, and more than 11 percent of student loan balances were either severely delinquent or already in default.2 With the costs of college rising and the bene ts in doubt, many are wondering whether earning a college degree still pays.
In this edition of Current Issues, we examine the costs, bene ts, and eco- nomic return of a college education. By analyzing more than four decades of data, we are able to put the recent experience of college graduates—those with either a bachelor’s degree or an associate’s degree—into historical perspective. Our analysis reveals that…...

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