The Data Points blog at the Chronicle of Higher Education:
One could be excused for thinking the value of a college degree is in a downward spiral. With overall student-loan debt topping $1-trillion and tuition racing upward, to college graduates facing high levels of underemployment and stagnating wages, it might appear college simply isn’t worth it.
However, a study released on Tuesday by two researchers with the Federal Reserve Bank of New York concludes the opposite is true: The value of a bachelor’s degree is near an all-time high.
The researchers, Jaison R. Abel and Richard Deitz, found that despite some “alarming trends,” a bachelor’s degree for a 2013 graduate was worth $272,693, on average, and when adjusted for inflation, the value of a degree has hovered around $300,000 for more than a decade.
Why has the value of a degree remained so high while wages stagnated and tuition spiked?
“The primary reason is that the wages of high-school graduates have been falling, reducing the opportunity costs of going to school and keeping the college wage premium near its all-time high,” Mr. Abel and Mr. Deitz write.
In other words, the wages students forgo while attending colleges—the “opportunity cost”—are lower than they used to be, and the average wages for those who don’t have a college degree keeps falling. Even though the wages for college graduates are not increasing, the gap between their pay and earnings of those with only a high-school diploma has increased, keeping the value of a college degree from falling.
It is not often that one reads "opportunity cost" outside of a textbook.
