Just in time for commencement season, recent graduates wallowing in debt and uncertain futures may be glad to know that all the money spent on their four-year college degree was still a worthy investment to make. A report by the San Francisco Federal Reserve Bank found that a degree today is worth $831,000 and college graduates make 61 percent more annually than those without a degree.
The Federal Reserve Bank calculated the value of going to college by estimating college earnings premiums – or how much a college graduate would make in comparison to his/her peers with only a high school diploma. What they found was that college degree-holders earned, on average, $20,050 more annually than those who aren’t.
College earning premiums have risen consistently over the years, and the Federal Reserve Bank makes the claim that there is hardly any evidence to suggest that the value of a college degree has declined at all.
The report also calculates the benefit of going to college weighed up against its exorbitant costs. The break-even amount of annual tuition for the average college grad is about $21,200. This may seem low, but the Federal Reserve Bank says:
However, 90 percent of students at public four-year colleges and about 20 percent of students at private nonprofit four-year colleges faced lower annual inflation-adjusted published tuition and fees in 2013-14.
There’s been a lot of media attention lately around the idea that maybe a college degree just isn’t worth it after all. With student debt growing at faster rates than any other type of debt in the United States and college tuition skyrocketing year after year, the value of a degree has been called into question in today’s fiercely competitive and slowly recovering economy.
A college degree may still be worth close to a million dollars now, but a Washington-based policy firm calculated that an undergraduate degree will not be worth the cost by the year 2086, when college will cost around $724,000 in total.
But for now, the average college grad can still recover the costs of college in under 20 years, and will continue to reap the benefits of the investment throughout the rest of his or her working life.
Images via Morguefile and the Federal Reserve Bank of San Francisco
