Years ago, post-secondary institutions and public officials touted that if students were to attend university then they can earn $1 million more than a non-university graduate. That figure has since been disputed because the number was distorted due to the growing number of billionaires who have university degrees.
A new number is now being promoted by the United States central bank: $800,000.
The Federal Reserve Bank of San Francisco published the findings of a study Monday that found a U.S. college graduate will generate at least $800,000 more than the average high school graduate. The figure is after calculating the high cost of tuition and the four years of lost wages.
The researchers discovered that a college student who doles out more than $21,000 in annual tuition will regain that investment by the time they reach the age of 38. In addition, they noticed that 90 percent of students in public colleges and 20 percent of students in private colleges pay less than that amount – though the cost of college tuition has been rising 4.5 percent at private institutions and 8.3 percent at public colleges.
When a college graduate hits retirement, they will have earned on average $831,000 more than someone who never attended college.
Despite the numerous reports highlighting the drawbacks of attending university, such as the student loan debt levels exceeding $1 trillion and the paucity of employment opportunities, the Fed concluded that it was “still worth it.”
“Although there are stories of people who skipped college and achieved financial success, for most Americans the path to higher future earnings involves a four-year college degree,” wrote Mary Daly, the San Francisco Fed’s associate director of research, and Leila Bengali, a research associate, in the latest Economic Letter from the regional Fed bank.
The study authors also cited numbers from the Bureau of Labor Statistics (BLS), which noted that high school graduates face higher unemployment numbers compared to college graduates. When it comes to wages, however, it’s quite a different story. In Canada and the U.S., the earnings gap between high school and university degree holders is closing.
“When the labor market takes a turn for the worse, as during recessions, workers with lower levels of education are especially hard-hit,” the researchers said. “Thus, in good times and in bad, those with only a high school education face a lower probability of employment, on top of lower average earnings once employed.”
It has been known for a long time that post-secondary education is expensive and has been growing at a rapid rate each year since the federal government became involved in this sector.
Critics argue that tuition rates continue to increase exponentially because the government guarantees student loans and thus universities and colleges will raise tuition fees accordingly.
United States Vice President Joe Biden even concurred in 2012 with this fact and said that government subsidies contribute to growing college costs: “By the way, government subsidies have impacted upon rising tuition costs. It’s a conundrum here.”
The post-secondary education debate has occurred frequently: is it better to gain a trade rather than garnering a liberal arts degree? Should one attend a private or public college? If you don’t have good grades, is it better to forego post-secondary education entirely and work to gain skills? This research report will likely incite even more debate.
Whatever the case is, students are in astronomical debt.
