COLUMBUS – At a time when many are criticizing the high cost of higher education and questioning the worth of a four-year college degree, an updated edition of a study of post-college earnings indicates a graduate can see as much as a 20 percent return on investment.
The analysis of data shows that a four-year college education provided Americans with a 12 to 14 percent private rate of return on their investment during the 2000s and the return may be as high as 15 to 20 percent when factors like the value of a degree, investment risk and uncertainty are taken into account, said Matthew Mayhew, professor of educational studies at The Ohio State University and co-author of How College Affects Students: 21st Century Evidence that Higher Education Works.
“These results show that, despite the valid concerns about the growing costs of a college education, higher education is still worth it, said “I don’t know anyone who wouldn’t take a 12 to 20 percent return on an investment these days,” Mayhew said. “Ultimately, college is worth the money you put into it.”
The 15-20 percent return found in the analysis by Mayhew and his colleagues is higher than the 10 percent return estimated in the 1980s and 12 percent in the 1990s, he said.
The private rate of return is the economic benefits of education, such as income, after taking into account the direct and indirect costs of college, including tuition, books and loss of income while in school.
One reason that the rate of return appears to be higher now than in the past may be that researchers are getting better at measuring more ways that a college education can help students make economic gains after college, Mayhew said.
Studies in the 2000s showed that, for the first few years following college, earnings increased by approximately 4.8 percent for each year of college education attained, and those increases grew to 7 to 9 percent in later years.
This is the third volume of a book and uses data from 2000 to 2013 to update results from the earlier two volumes, which were published in 1991 and 2005.