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Despite Rising Costs, College Is Still a Good Investment

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Abstract

In our last post, we showed that the cost of college has increased sharply in recent years due to the rising opportunity cost of attending school and the steady rise in tuition. This steep increase in the cost of college has once again raised questions about whether college is “worth it.” In this post, we weigh the economic benefits of a bachelor’s degree against the costs to estimate the return to college, providing an update to our 2014 study. We find that the average rate of return for a bachelor’s degree has edged down slightly in recent years due to rising costs, but remains high at around 14 percent, easily surpassing the threshold for a good investment. Thus, while the rising cost of college appears to have eroded the value of a bachelor’s degree somewhat, college remains a good investment for most people.

Suggested Citation

  • Jaison R. Abel & Richard Deitz, 2019. "Despite Rising Costs, College Is Still a Good Investment," Liberty Street Economics 20190605, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87339
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    File URL: https://libertystreeteconomics.newyorkfed.org/2019/06/despite-rising-costs-college-is-still-a-good-investment.html
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    Cited by:

    1. Vanessa Brown & Gardner Carrick & Maggie R. Jones & Nikolas Pharris-Ciurej & John Voorheis & Caroline Walker, 2022. "The impact of manufacturing credentials on earnings and the probability of employment," Working Papers 22-15, Center for Economic Studies, U.S. Census Bureau.

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    Keywords

    Return to College; college graduates;

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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