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Oh Really?

What’s college worth anyway?

Lizzie O'Leary Sep 5, 2014

It’s a more important question than ever when you look at our economy today. College graduates have a much lower unemployment rate (3.2  percent) than adults with only a high school degree (6.2 percent).

Two economists from the New York Fed wrote in a recent paper that “the value of a bachelor’s degree for the average graduate has held near its all-time high of about $300,000 for more than a decade.”

Essentially, a degree is worth a fair chunk of change. Plus, it gets you connections — possibly from your professors, or the people you meet around campus.

Business Insider wrote up their research nicely, essentially noting that it only takes about a decade to work off what you paid for your degree. Back in the late ’70s, it used to take more than 20 years.

At the same time, wages for people with only a high school degree are falling, which exacerbates the split.

But that’s value, not cost. Which is where student loans come into play.

One the one hand, loans can be great, since they contribute to the democratization of higher education. Students who do not have the wherewithal to pay full freight, or get enough grants to do it, can take out loans. Yay? Maybe. It depends.

Color matters. While black and white students tend to borrow the same amount, debt weighs more heavily on black families, according to a new study.  This is where I think the difference between income inequality and wealth inequality is key.

Even though we talk a lot about income inequality, talking about wealth inequality (and the historical barriers preventing black families from amassing wealth), really matters.

If your income takes a hit and you or your family don’t have any cushion to absorb it? Then that degree isn’t worth all that much. And the loan bills feel heavier and heavier.

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