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Study Says College Degree Still Worth It

09 Jul
Colin

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Despite the fact that college tutition and other higher education costs have been rising in the past several years, a new study published by the Federal Reserve Bank of New York still indicates that it is worth the time and money.

 

The study, by economists Jaison R. Abel and Richard Deitz found that over a person's lifetime, those with an Associate's degree will make about $325,000 over those with just a high school diploma.  A Bachelor's degree is an even larger jump, with a $1.2 million increase over someone with just a high school diploma.  Although the study did not include degrees above the Bachelor's level, it is safe to assume that the increase in income would continue.

 

There are many reasons for this income advantage, despite the rising cost of college tuition.  The most important is that although college degree holder's wages have fallen, the wages of those without college degrees has fallen more.  College tuition costs have also been at least partially decreased by an increase in the availability of full and partial scholarships and grant money, along with the relative ease of obtaining loans.  Athough those who attend college full-time do miss out on 2 to 4 years in the labor market, when they enter they typically will earn between 10 to 15 percent more than those without degrees.  For comparison, investing in the stock market usually returns around 7%, and investing in bonds returns only around 3%.

 

One caveat, however, and something we mentioned in our article on STEM skills vs. Bachelor's degree - the major you pick does matter.  In general those majors that require high levels of knowledge of STEM subjects, those in the health field, and those in business return the best investment - close to 15%.  Majors such as liberal arts, hospitality, agriculture, and education generally have returns closer to the 10% level.  The article does state, though, that education may not be reliably represented - since most teaching jobs require a Master's degree, and only those with a Bachelor's were included in the study.

 

You can read the full report right here.

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