Report: A College Degree Increases Lifetime Earnings

The Federal Reserve Bank of New York published a new report that confirms that the value of a college degree is still significant and a worthwhile investment for most students. This report, which addresses the return on investment (ROI) of a college degree, is one component of a two-part series. Part two discusses for whom college may not be the right path.

According to the ROI report, a college degree results in a 12.5% increase in lifetime earnings, a return on investment that is “well above the threshold for a sound investment,” which is roughly 8%. This return is within the 12 to 13%expected return for a college degree that has held steady over the last thirty years. The analysis attributes the consistently high return on college degrees to ever-increasing benefits that have at least kept pace with the increasing cost of college.

In their accompanying analysis, the researchers describe the bottom quartile of students – those graduates who go into lower-paying careers – as the students for whom college does not pay off though they acknowledge that some portion of graduates who work in lower-paying careers do so by choice.

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Justin Monk