"A College Degree Is Worth $500,000"
In a time when many ask whether the rising costs of college outweigh its benefits, data suggests that college is still worth it. A new paper finds that the costs of college may actually be negative $500,000.
College costs have been rising: the average tuition at a public four-year college increased by 19 percent from 2004 to 2009 and then by another 27 percent between then and the last academic year. Taking room and board into account, it costs an average of over $40,000 a year to attend a private four-year college and over $18,000 to attend a public one.
But a New York Times report of a data analysis by the Economic Policy Institute shows that while tuition prices have increased, the benefit of a college degree has perhaps never been higher. Americans with a four-year degree made 98 percent more per hour than those who had not gotten a degree in 2013. As the Times pointed out, that number is up from 89 percent five years prior and 64 percent in the early 1980s. And average debt from attending a public university is $26,500, which pales in comparison to the income benefits of a college degree.
According to a study by MIT economist David Autor published last week, the largest economic inequality in the United States is between those with a college degree, whose real wages are increasing, and those without one, who have on average lower and lower income. Autor actually found that when tuition costs are subtracted from the gap between average earnings of college graduates and high school graduates, not going to college will cost you $500,000.
But while college degrees are translating into higher wages, the expected future incomes of people who attended college without earning a degree, including community college graduates, have not been increasing. If a student drops out of college, it may not have been an economically beneficial choice in the first place. One study showed that nearly half of American students drop out before getting a degree, many for economic reasons. Another report showed that 33 percent of community colleges have higher rates of students defaulting on loans than students graduating. Those students might benefit instead from a specific job training program than a community college.
Wage increases from getting a college degree are also not equal. A new report from the Center for Economic and Policy Research showed that black college graduates still face higher unemployment rates and more often end up in low-wage jobs that don’t use their degrees.
Abigail Bessler is an intern at ThinkProgress.