CLEVELAND FED STUDY

College smart choice for those who finish degree

7/18/2014

Even as tuition costs continue to rise, researchers from the Federal Reserve Bank of Cleveland say going to college is still the smart choice for most — as long as you finish your degree.

A study published this week found that between 1989 and 2010, households headed by young college graduates earned on average 45 percent more than their counterparts whose schooling stopped at high school.

But researchers say the benefits really kick in later in life. Those ages 30 to 65 with college degrees earned on average nearly 88 percent more than those without a degree over the same 21-year period.

Daniel Carroll, a research economist at the Cleveland Fed and one of the authors of the study, said the research shouldn’t be viewed as proof that everyone ought to go to college, but shows that even in a time of ballooning student loan debt, education pays off for most in the long term.

“People are more likely to come out with quite a bit of debt,” Mr. Carroll said. “People would often compare that to your initial earnings out of college, but one of the points we made is you may not realize the full advantage of that education until later in your life.”

The study didn’t separate college graduates by degree achievement, so the data include everyone from the man with an associate’s degree in business to the woman who studied medicine and went on to become a surgeon.

Still, Mr. Carroll said the results show that education is beneficial for the average person.

Interestingly, the research shows little to no benefit for those who attended college but did not complete a degree. In fact, that may be more detrimental than never having attended at all.

The median wages of those age 22 to 29 with some college but no degree are actually slightly lower than high school graduates who never attended college, a phenomenon that has been seen for most of the last two decades.

That reverses later in life, but even among those age 30 to 65, the premium for having some college experience is a more measured 22 percent.

And there’s a large portion of the U.S. labor force that falls into that camp. Researchers said a full 32 percent of those 22 to 29 have some college but no degree, while 25 percent of those 30-plus fit that category.

The average amount of household student loan debt carried by those people grew 270 percent from 1989 to 2010. That’s less astonishing than the nearly 400 percent growth for college graduates to $16,714 over that period, but Mr. Carroll said it goes to show how critically important it is people to think about the programs they are going into, their chances for success, their earning potential, and their ability to pay back their loans.

Though debt levels get a lot of headlines, Mr. Carroll said, “more debt isn’t necessarily bad in and of itself. What we really want to be concerned about is the rising cost of education. To a certain extent the fact that people carry more debt is that they have more access to credit.”

Bowling Green State University chose to freeze tuition and fees for the upcoming academic year. The University of Toledo board approved a 2.39 percent increase.

Contact Tyrel Linkhorn at tlinkhorn@theblade.com or 419-724-6134 or on Twitter @BladeAutoWriter.