College: a pretty good deal, if you can get it.

Is college worth it? A new study seems to indicate that college graduation, even with the growing cost of tuition, still returns income far above that of high school educated workers. Further, it isn’t the 1% that is the biggest cause of inequality in America–it’s college.


I hate my student loans.

I hate them with the heat of a thousand burning stars.

Nevertheless, I would be dishonest and disingenuous if I didn’t admit it that it’s a love/hate relationship. Although I worked through college and most of my grad degree to support myself,  because life would not stop for me, to paraphrase Emily Dickinson, student loans made it possible for me to stop for school.

Along the way, I married, started a family, and found a career. Having been on both sides of that fence, believe me when I say having a career beats having a job.

Fig. 1 College/high school median annual earnings gap, 1979–2012. Figure is constructed using Census Bureau P-60 (1979–1991) and P-25 (1992–2012) tabulations of median earnings of full-time, full-year workers by educational level and converted to constant 2012 dollars (to account for inflation) using the CPI-U-RS price series. Prior to 1992, college-educated workers are defined as those with 16 or more years of completed schooling, and high school–educated workers are those with exactly 12 years of completed schooling. After 1991, college-educated workers are those who report completing at least 4 years of college, and high school–educated workers are those who report having completed a high school diploma or GED credential.
Fig. 1 College/high school median annual earnings gap, 1979–2012.
Figure is constructed using Census Bureau P-60 (1979–1991) and P-25 (1992–2012) tabulations of median earnings of full-time, full-year workers by educational level and converted to constant 2012 dollars (to account for inflation) using the CPI-U-RS price series. Prior to 1992, college-educated workers are defined as those with 16 or more years of completed schooling, and high school–educated workers are those with exactly 12 years of completed schooling. After 1991, college-educated workers are those who report completing at least 4 years of college, and high school–educated workers are those who report having completed a high school diploma or GED credential.

I’m earning more than I did pre-college and even pre-law school, even adjusted for years in the workforce and inflation, and it’s sufficient to pay down my loans and afford my family’s needs.

Research seems to indicate that, in spite of the cost, it’s still a better deal to go to college than to avoid the debt and remain uneducated.

Over the long-term, I’ll continue to earn more than I would have without my two degrees. David Autor, in a study titled ominously “Skills, education, and the rise of earnings inequality among the “other 99 percent”,” argues that those with college degrees can expect a half a million dollars more in income over their lives than those without.

Among his other conclusions, Autor notes that in addition to increasing gaps between the vaunted heights of the 1% and the 99%, there are also growing gaps in income among the 99% between those with only a high school education and those who continue on to graduate from college.

Interestingly, the recession barely touched this effect. Says Autor, “[a]s Fig. 1 underscores, the economic payoff to college education rose steadily throughout the 1980s and 1990s and was barely affected by the Great Recession starting in 2007.”

More noteworthy, though is this: Autor suggests that the acquisition of skills in college is more substantial than if the gains by the top 1% income earners over that same period were distributed to the lower 99%.

Did you catch that? You would increase your income faster by going to college than if the wealthiest of our society redistributed their income to the rest of us.

Fig. 4 Present discounted value of college relative to high school degree net of tuition, 1965–2008. Reproduced from Avery and Turner with permission of the American Economic Association (39). Expected earnings are calculated from the March Current Population Survey files for full-time, full-year workers using sample weights. The estimates equal what a man or woman would expect to earn working full-time, full-year over a career of 42 years, with a discount rate of 3%, assuming that college graduates delay the start of earnings for 4 years while in school. Earnings expectations are formed in each year by assuming that future high school and college graduates will have future earnings at each age equal to the average earnings of high school and college graduates (respectively) currently observed at each age; for example, expected earnings in 1980 are based on data across ages for 1980. Results for college-educated workers are net of 4 years of tuition and fees associated with appropriate year-specific values for public universities. Plotted points show the difference between expected earnings for college graduates and for high school graduates.
Fig. 4 Present discounted value of college relative to high school degree net of tuition, 1965–2008.
Reproduced from Avery and Turner with permission of the American Economic Association (39). Expected earnings are calculated from the March Current Population Survey files for full-time, full-year workers using sample weights. The estimates equal what a man or woman would expect to earn working full-time, full-year over a career of 42 years, with a discount rate of 3%, assuming that college graduates delay the start of earnings for 4 years while in school. Earnings expectations are formed in each year by assuming that future high school and college graduates will have future earnings at each age equal to the average earnings of high school and college graduates (respectively) currently observed at each age; for example, expected earnings in 1980 are based on data across ages for 1980. Results for college-educated workers are net of 4 years of tuition and fees associated with appropriate year-specific values for public universities. Plotted points show the difference between expected earnings for college graduates and for high school graduates.

Other interesting suggestions in Autor’s research to support going to college?

  • Wage inequality is increasing across the spectrum, not just between the 1% and the other 99%.
  • Getting new skills pays off best in the United States.  Among Organization for Economic Cooperation and Development (OECD) member countries, the return for skills acquired to income is by far the highest. For each unit increase of cognitive ability increase, a worker in the US can expect a 28% return.

It’s an interesting piece of research, and Autor has more to say than what I’ve highlighted here.

Even with the increased income promised by increased skills, the question remains: is college worth it?

In my view, yes and maybe.

Based on my experience, I would be hard pressed not to recommend higher ed to any wondering whether they should go, but only with some caveats.

First, go with a plan. Education isn’t cheap, and most start college at a time when they know little about the world, what they want to be, and where they will work.

A lot of time can be wasted figuring that out, and the cost to do so is expensive. Take classes that teach skills along with the liberal education standards and learn to write, think, and learn.

That’s right: learn to learn. The world won’t stop changing, and you’ll need to continue to learn along the way.

Second: find good mentors and get some good advice.

Sit down with people in the real world in careers you want to follow. Find out how they funded school, how long it takes to pay it off, and what sacrifices they have had to make to afford it. The school guidance counselor does not qualify as this person.

Get advice on how to get through with as little debt as possible, too. Working while in school can cut into time to study, but it can also focus your efforts. Play less now, and you can play more later.

Patience is bitter, but its fruit is sweet,” said Aristotle and when it comes to your education, paying for it with as little debt is worth missing out on a party or two during college.

Last: take on as little debt as you can. I appreciate my education, but I still hate my student loans. I look forward to paying that last check to pay them off.

College is worth it. Expensive and increasing in cost each year, but worth it.


Previously posted at Publius Online

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