New investigations suggest that the financial undertaking of securing a college degree represents a rewarding investment according to multiple standards. This intel comes from an insightful exploration conducted by economists attached to the Federal Reserve Bank of New York. The analysis assessed the costs associated with college education as well as the subsequent benefits. The findings indicate that superior paying career opportunities are ushered in by a college degree for the average graduate, equating to an annual monetary return of 12.5%. This stands in contrast to the 10.1% annualized return offered by the S&P 500 stock index since 1957.
The study, conducted by head of microeconomics at the New York Federal Reserve, Jaison Abel, and Richard Deitz, an economic policy advisor, considered tuition fees, the typical extent of financial aid, and the 'opportunity cost' of missing out on the earnings a high school graduate could procure by choosing employment over continuing education.
Results vary on an individual-by-individual basis, however, and while the investment proves fruitful for most, this isn't the case for everyone. The scholars stated in a distinct blog post that students who didn't receive financial aid, those enrolled in more expensive institutions, those who spent over four years obtaining an undergraduate degree, and those who opted for majors leading to less remunerative professions experienced a diminished return on their investment.
For instance, engineering majors witnessed a median return of 18%, while education majors saw a median 6% return; although, as noted by the researchers, many educators receive salaries for nine months of work in a year. The scholars noted that around 25% of students only achieved a 2.6% yearly return on the money spent on their higher education, leading to doubts about the financial wisdom of the investment.
Despite these concerns, the study concluded that a college degree still paves the way to more lucrative career opportunities over a working career of 40 years. According to the researchers, "The typical college graduate earns a return that easily surpasses the benchmark for a sound investment".