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U.S. College Degrees an Expensive Investment

College tuition rates have been rapidly increasing in the United States since the 1980s. As the costs of obtaining a college education continue to rise and increasingly require many students to take out loans and graduate with substantial debt, the question of whether or not college is really worth the price tag has begun to be discussed more frequently. A recent article on VoxEU presents estimates that a college degree has a risk-adjusted value between $225,000 and $600,000. While earnings for college grads have become more volatile over time, degree holders are are less likely to experience unemployment than their degree-less counterparts, and even conservative estimates for the returns to earnings for a college degree compared to its cost are still positive.

The merits of obtaining a college education have long been discussed, and the topic has been increasingly debated over the past decade, as college tuition rates continue to skyrocket and seem to indicate no signs of stopping. Student loans and the debt burden many students face upon exiting college continue to present a significant risk to graduates entering the work force with uncertain economic conditions. With the struggles of graduates during the Great Recession to find employment and maximize the return on their degrees, many have become wary of making a significant, costly investment in a college degree. However, with the significant return on investment and well-documented benefits of possessing a college degree, hopefully fewer and fewer students will start to view the prospect of spending on a college education as a risky investment.


  1. moorem15 moorem15

    I think this analysis of the cost of higher ed may be more applicable to people on the so called ‘edge’ between choosing to go to college and not. I think for most people, a college education is a ticket to at least the middle class. If anything, I can see this type of analysis having a greater impact on degrees pursued.

  2. “College” includes a wide variety of institutions; prices have not necessarily risen for community colleges. But as per comments on a previous post on education, you really need to ask what “college” means from a labor force perspective: a filter and signal, reflecting a combination of personal characteristics operating via self-selection; learning and skills; and socialization. So as enrollments rise, that is when supply is higher, does the relative market valuation — the wage you get — decline?

  3. grieve grieve

    The skyrocketing prices of college tuition are shocking, especially considering that in Europe many top Universities only charge around $15,000 annually for citizens to attend.

  4. wintera15 wintera15

    I agree that college is still a relatively easy decision for those who can afford it. However, as the prof mentioned, those who are faced with either racking up student debt or attending a community college that most likely limits your future earnings, the decision is much harder.

  5. winn winn

    I remember talking about this issue in another class. Its hard to make professors — let alone any other service industry that’s main input is capital — more productive. Would lecturing to a larger body of students during a lecture make professors more efficient? Or would this decrease the quality of education?

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