Yes, college is worth it

Questions regarding the value of a college education have spiked recently, highlighted by high-profile media coverage. Beyond the hype, three substantive attacks have been levied: (1) the college wage premium is illusory, (2) the lifetime wealth premium that college graduates receive is disappearing, and (3) the risk associated with a college investment has increased. Is college really not worth it? 

That overarching question, however, is misguided. There certainly are problems in the higher-education system that need to be dealt with. Among other things, cost is an important problem. College is perceived as being more expensive than it really is. Yet many students, particularly those from lower- and middle-income families, are prevented from attending college because the cost is often still too high. Among those who do enroll, high costs can prevent them from completing their degree. That needs to be fixed. But broadly speaking, college is still worth it. 

Going to college is an investment decision. It comes with benefits and costs. They do not need to be monetary, but it can be easier to think about it that way. Just like any investment decision, there are risks involved. College is worth it if the benefits are typically greater than the costs and the investment is not associated with extensive risk. If so, it may not be right for everyone, but in general it should be considered “worth it.” 

The benefits of college tend to be large. Evidence clearly documents that the wages of college-educated workers are considerably higher than that of workers with only a high-school diploma. 

That fact may be misleading, though, if the characteristics of the two groups of workers are different. A better measure of the “college wage premium” compares the wages of those with similar characteristics, including age, gender, and work experience. The results of such research indicate that, on average, workers with a bachelor’s degree earned 88% more than comparable high-school graduates in 2021. This premium has plateaued over the preceding decade at historically high levels. 

Still, this wage differential may not be the result of the college education itself. It may be that students with higher earnings power in the job market, regardless of their education, are more likely to go to college. Correlation is not causation. How much of the college wage premium can be attributed to the college degree itself? 

Economists have dedicated extensive effort to answering that question. Seminal studies examine the impact of growing up near a college (making it easier to attend), having a test score just above an admissions cut-off (more likely to enroll), and even comparing outcomes for identical twins when one has more education than the other. The results unambiguously indicate that most, if not all, of the wage premium is caused by going to college. 

Of course, such studies often look at the average return. As with any investment decision, it is important to consider the range of possible outcomes. Even for students graduating with below-average earnings, college continues to provide a positive return. Still, there are important differences across the type of colleges students attend. At public four-year institutions, a college degree provides a positive return for most students. At private institutions, the average return is high, but it is more variable across institutions, particularly those that are for profit. 

But what about lifetime earnings and a degree’s impact on wealth? 

Research shows the net worth of more recent college graduates is not that much higher than high-school graduates. In other words, the “wealth premium” has largely disappeared. But other researchers have pointed out that adults who are still approaching the prime of their careers simply may not have reached the point where the college wage premium truly kicks in. It is at that stage that the promotions and raises associated with a college degree begin to generate greater wealth. 

To be sure, when college is viewed strictly through an investment lens, there are steps students can take to raise the odds of a larger return. First, the return varies based on college major. Students who major in certain fields (generally STEM and business) receive higher earnings, on average. Second, students need to graduate. As the former Secretary of Education Arne Duncan has said, “The most expensive degree is the one you don’t complete.” Students who borrow to enroll in a program that they do not complete are much more likely to default on their loans. 

Over all, it certainly is possible for students to attend institutions and major in fields that don’t offer much economic value. We should make it possible for students and families to access accurate information that would enable them to make wise choices. We should also take steps to improve completion rates. But taken as a whole, a college education typically improves students’ subsequent earnings considerably. 

Besides, the benefits of a college degree often go beyond the increase in income. College equips adults with skills to navigate the rest of their lives. Researchers have found that a bachelor’s degree significantly helps recently unemployed workers to find new jobs. A college education also increases healthy behaviors (like exercise) and reduces harmful activities (such as smoking). It contributes to a wide and growing mortality gap between college- and non-college-educated adults. It may even make people happier. 

Beyond the benefits college graduates receive, society is better off with more college-educated workers. Employers need skilled workers to navigate ongoing, rapid advances in technology, and college remains the surest path to acquiring such skills. College-educated workers also boost other workers’ productivity, raising the wages of high-school graduates and those who drop out alike. The social return extends beyond the economy as well: Greater education reduces criminality and boosts civic participation. 

Despite its substantial benefits, though, college still may not be in the cards for some if the costs are too high. This is where the problem lies. Polling data provides strong evidence that cost is a major impediment to college access. 

Part of that problem is perception. Sky-high sticker prices turn off students even though financial aid reduces that price for most students. But the amount they actually have to pay (the “net price”) is still too high, particularly for lower- and middle-income students. For those college students who are at risk of dropping out, financial concerns are the leading cause. 

That does not mean college isn’t worth it for those students. The benefits are still generally large, and the tuition costs are actually smaller for lower- and middle-income students, making it even a better investment. But if they can’t come up with the money, they can’t go. This is about access, not worth. 

We do a disservice to students, their families, and society more broadly by focusing on the question of whether college is worth it. For the most part, the answer is yes, it is. That does not mean there are no problems in the higher-education sector. Some programs at some institutions are not a good investment. Prospective students should know that, and predatory programs should not be subsidized with federal dollars. Obstacles to college completion must also be overcome. 

But the cost remains a substantial problem. Colleges need to do a better job telling students the truth about how much they will pay. The sticker price is the best-known amount, and it is almost always wrong. Pricing policies that inflate the sticker price and then give extensive merit awards to all students don’t help. Beyond communication, though, costs need to be lower, particularly for lower- and middle-income students. Greater federal funding for need-based financial aid is a good way to accomplish that. Over all, we would be well served figuring out how to make a high-quality college education available to more students and pushing back against scare tactics that lessen their desire to go.