Is College Still Worth It? It’s Complicated
Date Posted: February 19, 2019
Posted In: Discussion, Workforce,
From Federal Reserve Bank of St. Louis: Is college still worth it? That was precisely the question posed at the Center for Household Financial Stability’s biennial research symposium held in May of last year. To help answer that question, the Center commissioned original research from leading scholars in the fields of economics, sociology, education and public policy. As one might expect, the findings were rich and varied.
The Conventional Wisdom about the Benefits of College
We corroborated the conventional wisdom that, on average, a college degree is associated with higher family income and wealth over one’s lifespan.1
However, the extent of the returns depended on several demographic characteristics—most notably, when people were born and their races or ethnicities. In particular, the financial benefits one can expect from a college degree appear to be lower among people born in the 1980s, and they remain unequal across racial and ethnic groups.
Separately, we also found that the likely payoff to a college degree depends on whether you have a college-educated parent. First-generation college graduates typically receive an income and wealth boost, but they fall short of college grads whose parents also have college degrees.
A Declining Boost from College Degrees, Especially for Wealth Accumulation
We examined the income and wealth of college graduates and postgraduate degree holders born between 1930 and 1989 and found two consistent trends.
First, the average college and postgrad income premiums (the amount a family headed by a four-year or postgrad degree holder earns in excess of an otherwise similar family) have declined somewhat across successive birth-decade cohorts (born in the 1930s, in the 1940s, etc.) but remained substantial.
In terms of earnings, college is clearly still worth it. This was true for all races and ethnicities, including non-Hispanic white, black, Hispanic of any race and all other families.