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New Fed Study Shows College Still Worth It

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Despite the rapidly growing cost of going to college over the last couple of decades, and a slew of wealthy businessman advising high school graduates to avoid attending college, a new study from the Federal Reserve Bank of San Francisco suggests that a college education is still a good idea for your financial future.

The Fed study found that, over a lifetime, the average U.S. college graduate will have total earnings of at least $800,000 more than the average high school graduate.

Statement from San Francisco Fed

The researcher who undertook the study highlight that the results of the study essetnially mean that college is still “worth it.” Although there are stories of people who skipped college and achieved financial success, for most Americans the path to higher future earnings involves a four-year college degree,” explained Mary Daly, the San Francisco Fed’s associate director of research, and research associate  Leila Bengali, in the latest Economic Letter from the regional Fed bank.

Daily and Bengali do point out, however, that there is no evidence that expensive private college results in higher income over a lifetime. “Although some colleges cost more, there is no definitive evidence that they produce far superior results for all students,” they wrote, adding “… redoubling [societal] efforts to make college more accessible would be time and money well spent.”

Study methodology

The more than $800,000 in additional income over a lifetime for college graduates calculated in the study includes the full cost of college tuition as well as the four years of wages lost while completing a typical undergraduate degree.

According to data from the study, a college student who pays $21,200 in yearly tuition will make back that investment that investment through higher earnings by age 38. Almost 90%  of public college students and 20% of private college students pay less than that amount, they found. By retirement at age 65, the average student will have taken home $831,000 more pay than someone the sane age who did not attend college.

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