Are college costs worth it?: how ability, major, and debt affect the returns to schooling

This paper examines the financial value over the course of a lifetime of pursuing a college degree under a variety of different settings (e.g. major, student loan debt, individual ability). [The author] account[s] for ability/selection bias and the probability that entering freshmen will not eventually graduate. [The author] find[s] the financial proposition of attending college is a sound investment for most individuals and cost scenarios, although some scenarios do not pay off until late in life, or ever. [The author] estimate[s] the present discounted value of attending college for...  [+] Show more

This paper examines the financial value over the course of a lifetime of pursuing a college degree under a variety of different settings (e.g. major, student loan debt, individual ability). [The author] account[s] for ability/selection bias and the probability that entering freshmen will not eventually graduate.

[The author] find[s] the financial proposition of attending college is a sound investment for most individuals and cost scenarios, although some scenarios do not pay off until late in life, or ever. [The author] estimate[s] the present discounted value of attending college for the median student to vary between $85,000 and $300,000 depending on the student's major. Most importantly, the results of this paper emphasize the role that risk (e.g. the nontrivial chance that a student will not eventually graduate) plays in the cost-benefit analysis of obtaining a college degree.

Published abstract reprinted by permission of the copyright owner.