The Diminishing Returns of a College Degree

In the mid-1970s, far less than 1% of taxi drivers were graduates. By 2010 more than 15% were

 By Richard Vedder and Justin Strehle in the WSJ. Mr. Vedder is director of the Center for College Affordability and Productivity and teaches at Ohio University, where Mr. Strehle studies economics. Excerpts:

"The cost of college attendance is rising while the financial benefits of a degree are falling."

"From 2000 to 2016, the tuition-and-fees component of the Consumer Price Index rose 3.54% annually (74.5% over the entire period), adjusting for overall inflation. With sluggish business investment, a slowdown in income growth has aggravated the rising burden of paying for higher education. American families have taken on more than $1.3 trillion in student-loan debt—more than what they borrow with credit cards or to buy cars."

"the earnings advantage associated with a bachelor’s degree compared with a high school diploma is no longer growing like it once did. Census data show that the average annual earnings differential between high school and four-year college graduates rose sharply, to $32,900 in 2000 (expressed in 2015 dollars) from $19,776 in 1975—only to fall to $29,867 by 2015." 

"about 40% of recent college graduates are “underemployed,” often for a long time."

"recent attendees of Stanford University earn on average far more than twice as much as those attending Northern Kentucky University ($86,000 vs. $36,000). Electrical engineers typically earn twice as much as psychology majors."

"In recent years, male college graduates’ earning power has decreased significantly, as it has for whites and Asians. Not so for women, Hispanics and blacks, for whom the financial payoff to a college education has continued to rise. College graduates traditionally earn more than high school graduates in part because their degrees act as signaling devices in the job market."

"As the proportion of adult Americans with college degrees grows beyond one-third, being a college graduate no longer necessarily denotes exceptional vocational promise. The bachelor’s degree is not the reliable signaling device it once was."