Taking a Closer Look at the Value of an Education

Many studies in recent years have shown the significant, measurable, undeniable difference in earnings and salary between employees with varying levels of college education (or lack thereof).

But many of these studies’ results have been a little obscured by such variables as gender, race, ethnicity, place of birth, and high school performance, all of which could potentially have been skewing the results one way or another.

A new study gets us a bit closer to seeing the full picture by controlling for those variables.

The result: The cost of a college degree—especially an extremely affordable college degree—is easily paid for by lifetime earnings increases.

It finds that those variables have, indeed, overinflated the difference between high school graduates and college graduates—but only by a little, and even when controlling for demographics, the increase in lifetime earnings for college grads is stark.

In the controlled study, men with a college degree earned $840,000 more over 50 years than men with just a high school degree (compared with a difference of $1.13 million when demographics are not factored in); for women, that difference is $587,000 (compared with $792,000 when removing demographic controls).

That translates to about $16,800 more per year for men and $11,740 more per year for women who have college degrees!

The researchers behind the study, from the University of Kansas, were the first to use the Social Security Administration’s personal income tax data to peer past socio-economic factors that may present opportunity and workplace advantages or disadvantages that obscure the overall effect of a college education.

And while the results show that previous studies over-estimated the lifetime value of a college degree by about one-third, the fact that the earnings gap is still so dramatic is strong confirmation that previous studies’ general finds were correct: A college degree is more than worth it!

“This corroborates a college education still yields a substantially more financial reward than it costs,” said ChangHwan Kim, the University of Kansas associate professor of sociology who was part of the research team. “Our results show higher growth rates in median earnings over the lifetime of college graduates relative to high school graduates, which suggests greater intra-generational mobility.”

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