Federal Reserve Bank of San Francisco: College Still a Good Investment

Earlier today, the Federal Reserve Bank of San Francisco released an "Economic Letter" titled "Is It Still Worth Going to College?" The letter, authored by Mary C. Daly and Leila Bengali, sought to answer the question that many young people are asking themselves in this day and age - is college worth it?

After all, the media is filled with stories of college graduates who are neck-deep in debt and without viable job prospects. Who doesn't know somebody who has recently graduated from college and is still living in home with their parents because they can't find meaningful employment?

According to the report from the San Francisco Fed, college graduates will earn, on average, $20,050 (61%) more per year than a high school graduate. In addition, college graduates will also significantly out-earn those who were able to complete some college courses.

Over the course of a lifetime, assuming that both retire at 67, the average college graduate will earn $830,800 more than the average high school graduate.

The report states that accumulated earnings for college graduates and college non-graduates will equalize roughly 20 years after graduation from high school. According to the SF Fed, the average college graduate will recoup the costs of attending college by the age of 40, assuming roughly $20,000 in tuition costs, as well as missed earnings between the age of 18 and 22.

The report also notes that those who graduated college in the '90s and the '00s enjoyed a $26,800 "college premium" 10 years after graduation. This means that, assuming that you graduated from college in say, 2000, you should be making roughly $26,800 more per year than somebody with just a high school education.

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It will be interesting to see how people who have graduated college from 2008 onwards will fare over the coming 10-20 years and what kind of "college premium" they will end up enjoying.

Source: Federal Reserve Bank of San Francisco - Is It Still Worth Going to College?

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