Does college pay? Here are some recent statistics from the St Louis Fed.
@Noreen,
College expenses loom large at IU, because college is one of our major investment goals. Most of us are either saving for College or paying for College or sometimes both.
Only about half of my HS class went to college. For my kids it's a lot more. It's been drummed into all of us that your career earnings will be much larger with a college degree. Is this still true? @Broadway pointed out on another thread that real wages have been stagnant in the US for decades. This would seem to imply that the data for college-grads looks similar to what you've shown for HS grads - not as much wage growth as there was in the past.
And even if it is still true that college grads make more - the ever-increasing costs of college means that parents and students need to really look at what they're getting for their money. Some degree programs just don't pay back, and there seem to be more and more stories of frustrated and unemployed college graduates with large loads of debt.
PC
Does college pay?
When individuals with only a high school diploma from the cohort born between 1911 and 1920 entered the labor force (age 20 to 29), their average earnings rose by a factor of 3.5 over the next 30 years of the working life span. In contrast, the profile for the cohort born between 1941 and 1950 is flatter: The rise in earnings for this cohort over the 30-year span is a factor of just 1.3. That is, the later cohort did not experience the same earnings growth over the life cycle as the earlier cohort did. So does it still pay to go to college?
SOURCE: Census data 1940-2000, IPUMS USA. Steven Ruggles, J. Trent Alexander, Katie Genadek, Ronald Goeken, Matthew B. Schroeder, and Matthew Sobek. Integrated Public Use Microdata Series: Version 5.0 [Machine-readable database]. Minneapolis: University of Minnesota, 2010.
Real earnings are measured in year 2000 dollars. Synthetic cohorts are built from census data for white male workers with only a high school diploma. Each life-cycle profile is described by mean earnings of four age groups: 20-29, 30-39, 40-49 and 50-59. Earnings at each age for each cohort are normalized by earnings at age 20-29 for that cohort.
Re: Easy financiing -> Bubble
Tenacious
4/22/2012 1:30:57 AM
I don't think it hurts for students to carry part of the burden of attending. In fact, it may make them value the experience more than they would if someone else was paying for it all.
Re: Easy financiing -> Bubble
driven
4/22/2012 1:26:46 AM
I think that's a fair statement. Back when tuition and board was $20,000 a year, many parents managed to pay for it. Now that it is $50,000, only the most fortunate can write checks for the full amount.
I suspect, PC, that far more kids now are spending their own money rather than their parents money. I know very few families today that pay 100% of their kids tuition (including me--my kids are deep in debt), in contrast to when I was in school.
@Scott,
I think you're really onto something with the connection between 'easy financing' and bubble markets. And 'easy financing' isn't limited to subsidized loans - parents play a role too.
In his Stanford commencemnt speech, Steve Jobs said part of the reason he dropped out of college was that he felt he was spending too much of his parents money. How many of today's college kids ever feel that way?
PC
@burn0050,
Agreed on the college sports thing. You would think some of these gargantuan sums of money could, like, go toward education?
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