CHART OF THE DAY: Is College Still a Good Investment?

There are and will continue to be just enough incredibly successful people who did not either attend college at all or did not earn a degree to raise at least some doubt in many parents and students minds regarding the 'Is it still worth it to attend college?' question.

While there is no disputing the achievements of people like Steve Jobs, Bill Gates, maybe the guy who owns your local chain of car dealerships, who did not actually complete college, it seems these examples are more likely outliers, and that for most people/students, heading down (and completing) the path towards a college degree remains for the most part a sound personal economic strategy.

Here's the chart. from the Federal Reserve of San Francisco, that I want to call your attention to that (Jobs and Gates aside), makes the 'college' case pretty strongly. It shows the earnings premium for college grads, and people with some college over people with just high school degrees.

So the data is pretty clear, college has been and remains a pretty sound investment for most. 

The research summary reads as follows:

Earning a four-year college degree remains a worthwhile investment for the average student. Data from U.S. workers show that the benefits of college in terms of higher earnings far outweigh the costs of a degree, measured as tuition plus wages lost while attending school. The average college graduate paying annual tuition of about $20,000 can recoup the costs of schooling by age 40. After that, the difference between earnings continues such that the average college graduate earns over $800,000 more than the average high school graduate by retirement age.

There are a couple of caveats here - one is that the researchers used about $20,000 as an estimate for annual costs of college - as most parents know this could be really, really low especially for private or 'prestige' schools. And the data is not terribly recent, tapping out in about 2011 or so, not taking into account the latest wave of teenage App Store millionaires.

Sure college still probably isn't for everyone. But if you are a student or you are the parent of a student getting ready to face this decision you'd be wise to keep this research in mind. 

Have a great day!

Comments

[Stew]

I think the key thing is while a college degree won't make you a gazillionaire straight away.....it is a good fall back. Well some degrees are a good fall back, others are just a qualified hobby.....
Jobs and Gates found a way to make themselves qualified in their hobby without the degree. As did many Artists who don't have BA's.

But is very difficult to convince people that you are a rocket scientist without a) PHD in it or b) your own home-built-satellite orbiting earth.
Some food for thought.