Some Thoughts on the ROI of College

Typically in news articles about going to college, many writers quote the long term income differential between high school and college graduates. These stats clearly indicate that going to college and graduating leads to higher average incomes over one's working life.

Here is the "normal" picture:
High School graduate average lifetime earnings: $30,627
College Graduate average lifetime earnings: $56,625

But this ignores some really big red flags in deciding whether to attend college, which is that 56% of those who enroll in a four year college will not graduate within 6 years.

Here are the stats from the census on "drop-outs" vs. College Grads, lifetime average earnings:
Drop Out Average Earnings (56% of college entrants): $32,296
College Graduate Average Earnings (44% of college entrants): $56,625
Weighted Average: $43,017

But don't forget, the college graduate just spent $40-80K and owes $25K in student loans on average.

There's more: Of the 44% who do graduated in the last 4-5 years:  "74.4 percent of college graduates under age 25 had jobs. Of this same demographic group, 45.9 percent had jobs that actually required a college degree. " (Source)


So a high school graduate that enrolls in college can expect:
Drop Out: 56% chance
College Graduate with No Job: 11% Chance
College Graduate with a "Non-college": 13% Chance
College Graduate with Legit Job: 20% Chance

You can run the numbers and throw in estimations for the 24% who don't get good jobs right out of graduating college, but in the end you have 80% of not making a "college salary", and you'l probably be closer to the $40K range + an initial 4-5 year time period where you burn around $80K.

Other factors to consider:
- These numbers take into account the past college graduates, not the future influx of graduates flooding the market today (the college enrollment rate is up to 70% of high school graduates now). So the $56K number skews higher, taking into account graduates from 70's and 80's.
- No one knows the long term effect on wages of these factors, but the long term effects of graduating in a recession supposedly lower lifetime earnings by 17.5% (Lisa Kahn, Yale)