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Is College Worth It?

A group of recent college graduates dressed in caps and gowns, with honors regalia.

Photo by Charles DeLoye on Unsplash.

An article from this week's New York Times Magazine, Americans Are Losing Faith in the Value of College. Whose Fault Is That? looks at whether a college eduction is still worth it.

College graduates can expect to earn about 65 percent more than non-graduates. Graduate degree holders may earn even more. In other words, a college education is a ticket to a middle or upper middle class income.

When it comes to wealth, on the other hand, a college education doesn't do much for that. From the piece:

Older white college graduates, those born before 1980, were, as you might expect, a lot wealthier than their white peers who had only a high school degree. On average, they had accumulated two or three times as much wealth as high school grads of the same race and generation. But younger white college graduates — those born in the 1980s — had only a bit more wealth than white high school graduates born in the same decade, and that small advantage was projected to remain small throughout their lives.

It's even more pronounced for Black and Latine households. From the study itself (PDF download).

Among families whose head is White and born in the 1980s, the college wealth premium of a terminal four-year bachelor’s degree is at a historic low; among families whose head is any other race and ethnicity born in that decade, the premium is statistically indistinguishable from zero.

Wealth, as measured by your net worth, is the difference between your assets and your liabilities. If you own a home that's worth $600,000, and your mortgage is $550,000, then you have a net worth of $50,000. But let's say you earn $100,000, but have a $30,000 car loan for a car valued at $22,000, $1000 in savings, and $90,000 in student loans. Your net worth is -$81,000. You have no wealth.

And therein lies the problem: college is now so expensive and students have to borrow so much that they can never afford to accumulate wealth. Most will be lucky just to get out of debt. Add disparities in housing wealth and the value of a college education as a driver of wealth seems like a waste of time.

But should you forgo college altogether? That I'm less sure of. College still provides a wage premium. A four year degree still opens up a range of opportunities in relatively soft jobs that you can do for a long time. I'd personally rather have a higher income, even if it means delaying or foregoing wealth.