Recent Studies Confirm College Ultimately Worth The Cost

Struggling Grads: Don't Fret, College Ultimately Worth The Cost

NEW YORK -- Creighton Olsen routinely questions the wisdom of his college investment.

Specifically, whether his struggle to secure a decent-paying job since graduating from college a year ago justifies the expense.

"I guess I thought I'd get a good job and make a decent enough salary and be able to live like a middle class person,” says the 22-year-old who attended Belmont University in Nashville. He recently relocated to Worcester, Mass., to work for a company that sells medical software. As it stands now, his salary barely covers rent and utilities, let alone the nearly $50,000 he owes in student loans.

Olsen is hardly the only college grad wondering if he made the right decision. Combined with high amounts of student debt and a weak job market, the chorus against higher education is growing louder and more vocal. Lately, many are asking: Is college even worth it?

The answer, according to two reports released this week, is an unequivocal yes.

"The rate of return on getting a higher education is better than any other conventional investment around," says Michael Greenstone, who directs the Hamilton Project, a research group at the Brookings Institute.

To combat the growing criticism of higher education, Greenstone and his colleague, Adam Looney, decided to treat college just as they would any other type of investment. They took $102,000, or the average cost of four-year degree, and examined the best place to invest it -- whether in real estate, the stock market, bonds or a college degree.

"Going to college dominates all these other investments, hands down," says Greenstone. For instance, while the stock market produced an average return of 7 percent, a four-year degree averaged a return rate of 15 percent.

Greenstone emphasizes that the decision to go to college is best made over the long arc of a person's career -- not a hasty judgment reserved for the first year or two after graduation. He points out that an 18-year-old should base the decision of whether to attend college by comparing the earnings of college graduates versus their non-college-going peers. Because in terms of lifetime salaries, Greenstone finds that a high school graduate earns about $600,0000 less than a college graduate.

Despite difficult economic times, Stephen J. Rose, an economist at Georgetown University, also urges recent graduates to keep the faith. He cautions against relying on short-term thinking when deciding between going to college and the far riskier bet of entering the labor market armed with only a high school diploma.

Rose and his colleague, Anthony P. Carnevale, released a report Monday titled “The Undereducated American.” Taking a macro view, they say an economic recovery hinges on the addition of 20 million college-educated workers.

As an economist, Rose views the decision of going to college as "nowhere close to a difficult decision." With wage premiums averaging between 20 to 30 percent higher than they were 30 years ago, he describes it as a "clear no-brainer."

"A bachelor's degree is important to not only get you in the door but provides you with the skills to move ahead," says Rose. The two researchers found that an average college graduate earns $1 million over the course of a lifetime compared to those with only a high school diploma -- or the difference between making $29,000 a year versus $54,000.

But the college-for-all mantra is not without its detractors.

"Is college worth it? The answer is yes. Should everybody go? The answer is no," says Andrew Gillen, the director of research at the Center for College Affordability and Productivity, a Washington-based think tank.

More troubling to Gillen is the 57 percent college graduation rate -- or the nearly 40 percent who start out making the investment in a higher education, but never manage to cross the finish line.

Gillen sees it as essential to first improve K-12 preparation before colleges can adequately handle a huge influx, especially if it's to produce an additional 20 million graduates. "If you can fix the preparation pipeline, sure, send them to college, but we've got to fix that part first."

In the meantime, Olsen stays focused on the task at hand -- cutting corners wherever possible with the goal of paying down his student loan debt.

Growing up in rural Kansas to a father who worked as a farmer and a mother who worked as a teacher, Olsen believed that a college degree guaranteed him a fairly surefooted path forward.

While he believes the investment will ultimately pay off in the long run, a stable post-graduate life is proving more elusive than planned.

Currently, a monthly $8 Netflix subscription seems like an indulgence. And at a barbecue he attended recently, the additional expense of $10 bratwurst nearly sent him over the edge.

"I figured with a solid degree and a good work ethic that I wouldn't be worrying about this kind of stuff," says Olsen. "I guess I was wrong."

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