College Education Still Pays

If you want to put a few dollar signs on the value of higher education, here is a story from the Chronicle of Higher Education:

A glance at the current issue of The Economist's Voice: The value of a college degree

The hourly-wage gap between people with college degrees and those with only a high-school education has been growing for decades, but the rate of increase slowed in the 1990s. At the same time, tuition prices rose, leading people to ask whether college was still worth it. But after studying the financial risks and rewards of higher education, two economists have concluded that continuing one's education definitely still pays off.

"In fact, there are no signs that the value of a college education has peaked or is on a downward trend," say Lisa Barrow, an economist at the Federal Reserve Bank of Chicago, and Cecilia Elena Rouse, a professor of economics at Princeton University.

For the average student who entered college in 2003, the authors calculate, the cost of earning a bachelor's degree would be worthwhile if it raised the value of the student's lifetime earnings by $107,277. That figure represents the sum of average tuition and fees for a four-year degree program and the amount someone with just a high-school diploma could earn in the same span of time.

Ms. Rouse and Ms. Barrow write that a college diploma would raise such a student's lifetime earnings by as much as $402,959 -- nearly $300,000 more than the total cost.

That increase is important to focus on, in contrast to the rising cost of tuition, which the authors say has almost no effect on the value of a college education. In fact, despite the growth in the number of graduates, the wages of degree-holders continue to rise, indicating "an increasing -- not a decreasing -- demand for their skills," they write.

The article, "Does College Still Pay?," is available at http://www.bepress.com/ev/vol2/iss4/art3/