By Ray Boshara, Senior Adviser and Director, Center for Household Financial Stability
Like a lot of college-bound high school seniors, my son has until May 1 to decide where he’ll go to college. His cousin is deciding whether to finish the college degree he’s already pursuing since he thinks he can make a lot more money in Ohio’s now-legal medical marijuana industry. Another cousin decided against college altogether because he believes he could do quite well as an HVAC technician in ever-sunny Florida.
My son and his cousins are like millions of kids nationwide asking, “Should I go to college?” They are assessing whether college is worth it, at least economically. That’s no small decision, especially as the cost of college has risen dramatically. A March 2019 release from the Department of Education (PDF) shows that 38.5% of undergraduate students (2015-16) took out loans to help finance their education. And it’s worth noting the vast majority of undergrads received some sort of aid, whether loans, grants, work-study or other sources.
Oren Cass, in his 2018 book, The Once and Future Worker, sees American kids taking paths similar to these young men in my family. He found that:
Author Oren Cass will be featured at a free event at the St. Louis Fed on May 23, 2019: “Thrivers vs. Strugglers: A Growing Economic Divide and What to Do about It.” The first 100 people to register will receive a copy of his book. Learn more and register.
Given this range of educational paths, many wonder if college is actually worth it—exactly the question my Center for Household Financial Stability colleagues William R. Emmons, Ana Hernandez Kent and Lowell Ricketts, and several national experts explored at a research symposium last year, titled “Is College Still Worth It: Looking Back and Looking Ahead.”
So, is college worth it? Well, it’s complicated! But a few findings may be illuminating:
In other research on the financial returns from college released last year, my colleagues found that, amazingly, your parents’ education is also associated with how much wealth and income you will generate over your lifetime—whether you went to college or not. So even if you feel you’ve made a good decision about whether and where to go to college, how much wealth and income you end up with varies by educational decisions your parents made.
In other words, like just about everything else in life, where you end up economically is a product of both choice and chance. But controlling what you can control matters: If your parents went to college, your expected wealth gets a big financial boost—but it’s larger if you also went to college. If your parents did not go to college but you did, you’re likely to get an especially large spike in your expected income and wealth.
So whether college, commerce or cool air is your path, it’s helpful to know the economic value of a college degree.