Is College Still Worth It Financially?

****SPOILER**** Yep, it sure is.

I will be talking exclusively about the United States.  There are some basic takeaways I want to communicate:

  • It’s possible to be financially successful without a college degree, but it’s not likely at all
  • It’s possible to not be financially successful even with a college degree, but it is not so likely
  • College is not only a good investment for the individual, but society as a whole
  • Women and minorities benefit less from a college degree, which I think is indicative of institutional discrimination

Let’s look at lifetime earnings.  I got the information from this lovely source, which is full of a lot of other great data if you’re interested.


But college requires a big upfront investment.  Interest on student loans, tuition, etc. are expensive.  This source, however, says that “After taking into account investment costs, additional income taxes and social contributions paid, and better employment prospects, a man with a tertiary education will still have a net gain over his working life, of over 320,000 USD and a woman tertiary graduate can expect to have a net gain of close to 160,000 USD, both well above the OECD average of 175,000 USD for men and 110,000 USD for women. The public return on investment through higher tax revenues and higher social security contributions amounts to more than 190,000 USD for a man with a tertiary degree (90,000 USD for women), which is the highest value within the OECD.”  So even with all of the additional costs, there is still a substantial net gain, both for the individual and society through tax revenue.  With ballooning student loan rates and tuition costs, I wonder how this data will change over the next 20 years.

Here’s another really interesting breakdown:


While it’s true that there are people who are very financially successful without college degrees–and you may even know several of these people–overall, it’s not very likely.  For every person you know who made it big (higher than median earnings of those with a professional degree) without a high school diploma, there are 99 who didn’t.  For every person with an Associate’s Degree making it big, there are 19 people who didn’t.  A topic like this is rife with selection bias, just like immigration success stories.  You only hear the success stories.  You hear about your uncle or aunt or friend who makes a lot of money without a degree, but you don’t hear about the 50 other stories of people who weren’t able to do as well.  It is just like how you hear immigrant success stories of someone’s great great grandfather coming to this country with nothing but the shirt on his back and becoming a surgeon.  You don’t hear about all the immigrants who came to the country with nothing, worked hard, and still didn’t have the opportunity to succeed.  And perhaps their families remained poor for many generations after that.

A degree doesn’t guarantee success, though.  The OECD source mentioned above also says that in the US, 13% of people with higher education degrees earn half or less than half of the median salary of the average worker.  That number is relatively high among developed countries.  These are tough times, which makes it likely that you know someone with a degree who isn’t making as much as they should.  But knowing a person from this paragraph and knowing a person from the previous paragraph doesn’t at all mean that a college degree isn’t worth it or that it’s easier to find a job without a degree.

The Freakonomics Blog mentions the same OECD source, highlighting that the United States enjoys a higher premium for degrees than other countries, as well as higher returns to society via tax revenue.  People with degrees also hold their employment better.

Despite all this, I do not think that money is the only measure in the question of whether higher education is worth it.  As a secondary Mathematics Educator with a Master’s, I will probably make around $2.2 million over my lifetime, which is much lower than the median for most Master’s graduates.  I’m ok with that.  I’m in a career that is incredibly important for society and that makes me feel good.  Moreover, my education has shaped the way I think about the human condition and the way I appreciate the world.  That, to me, is worth a great deal.  This quality of education is worth  so much more than the money figures presented here can capture.  I am also happy that such quality education has made it to the Web for free.

If you’re interested in learning more, check out a great prezi among other resources here as well as the source I linked at the top.


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