College costs have been rising dramatically for years. And with many households still struggling from the effects of the recession, more and more families are questioning the value of such a substantial investment. But a recent report from the College Board reassures Americans that tuition dollars are still well spent.
Education Pays 2010 is the third installment in an ongoing series comparing the costs and benefits of a college education. This publication echoes the first two reports, which were released in 2004 and 2007. All three reports show that, in terms of employability and salary potential, a college degree will eventually pay for itself.
Higher Education Still Leads to Higher Earnings
The College Board report shows that, since 2007, median earnings for 4-year college graduates have climbed faster than those of high school graduates. In the same time frame, the unemployment rate gap between high school and college graduates has grown from 2.3 to 5.1 percentage points.
And yet lost jobs and decimated college funds are still causing students to compromise their institution choices or delay school for a couple of years. Meanwhile, parents are dipping into their retirement funds and students are taking on bigger and bigger loans to cover rising tuition costs.
But the College Board's data suggests that these sacrifices will in time pay off. When it compared the median cumulative earnings of college graduates to people with only a high school diploma, researchers found that college grads cross a financial threshold around age 33, or after 11 years of work.
At that point, higher earnings compensate for spending four years out of the workforce and cover the average tuition and fees at a public 4-year university - even if students were fully funded by loans. Graduates of 2-year degree programs cross that threshold around the same age; while they've had two more years of work, their earning potential is lower.
Benefiting More Than Your Wallet
Of course, the College Board reminds us there are other benefits of higher education that are more difficult to quantify. College graduates report being more satisfied with their jobs, and they are more likely to receive health insurance and pension benefits from their employers.
Furthermore, adults with degrees are more likely to be 'engaged citizens' than their peers, and they tend to have healthier lifestyles. College grads also typically spend more time engaged in educational activities with their children, taking them to libraries, museums, performances and other community events. As a result, the children of college-educated parents are more prepared for school - and more likely to someday do well in college.
The College Board also argues that having more college educated citizens benefits society. They pay more in local, state and federal taxes and require less financial support from government programs. Their healthier lifestyles even lead to lower overall health care costs for their communities.
These assertions are supported by data from the international Organization for Economic Co-operation and Development (OECD), which found a direct correlation between an educated citizenry and economic growth.
Is It Really Worth It?
In spite of all this data, the sticker price of today's colleges and universities can be shocking, to say the least. But the College Board reminds us that even now, many students receive significant grant aid to defray the up-front costs.
Be smart about your college choices, and educate yourself about low-interest (or free) payment methods such as scholarships, grant aid and federal loans. Don't let high tuition at your dream school discourage you from turning in that application - you never know what kind of financial aid you might get.