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On average, the benefits of a college degree far outweigh the costs. Looking at lifetime earnings, the total wage premium for a bachelors degree is $570,000.
Earnings trajectories by educational attainment
$80k
BACHELORS
$60k
$40k
$20k
HIGH SCHOOL
$0
24
28
32
36
40
44
48
52
56
60
64
ON AVERAGE
Several key dimensions significantly affect the return on a college degree, including
SCHOOL SELECTIVITY COLLEGE MAJOR GRADUATION RATE
#1
#1
Public schools tend to have higher return on investment (ROI) than private schools, and more selective schools offer higher returns than less selective ones.
Annual return on investment of a bachelors degree 2
PRIVATE, NOT-FOR-PROFIT PUBLIC
NEARLY
14% 12 10 8 6 4 2 0
1 in 5
of the 853 schools studied by PayScale offered a negative ROI.
NONCOMPETITIVE
MOST COMPETITIVE
HIGHLY COMPETITIVE
VERY COMPETITIVE
COMPETITIVE
LESS COMPETITIVE
Major matters
Recent analysis by the Census Bureau also shows that the lifetime earnings of workers with bachelors degrees vary widely by college major and occupation.
Work-life earnings, in millions of $U.S., by major
3.5 3.0 2.5 2.0 1.5 1.0 0.5 0
PHYSICAL SCI.
SOCIAL SCI.
LIB. ARTS
PSYCH.
ARTS
EDUCATION
The lifetime earnings of an education or arts major working in the service sector are actually lower than the average lifetime earnings of a high school graduate.
60%
of students who enter four-year schools finish within six years.
88
MAXIMUM
75
MINIMUM
62 49 40 35
MOST COMPETITIVE
COMPETITIVE
LESS COMPETITIVE
NONCOMPETITIVE
Policy implications
What can policymakers provide to help students make smart investments in their postsecondary education?
BETTER INFORMATION PERFORMANCE-BASED SCHOLARSHIPS GOOD ALTERNATIVES TO COLLEGE
Information on financial aid and graduation rates needs to be more readily available. The PayScale college rankings and the Obama Administrations new College Scorecard are steps in the right direction.
Good research on programs like Georgias HOPE scholarships or West Virginias PROMISE scholarships suggest that attaching strings to grant aid can improve college persistence and completion.
There are many well-paid job openings going unfilled because employers cant find workers with the right skillsskills that young workers could learn from training programs, apprenticeships, a vocational certificate, or an associates degree.
All of this suggests that it is a mistake to unilaterally tell young Americans that going to collegeany collegeis the best decision they can make. A bachelors degree is not a smart investment for every student in every circumstance.