College Still Pays Off, but Not for Everyone

By Josh Mitchell of The WSJ. Excerpts:

"Investing in a college degree still pays off for most students with higher salaries and greater wealth, but in recent years it has become riskier, splitting graduates more widely into haves and have-nots.

“It just has not been the blanket guarantee of following the same path to prosperity that the earlier generations followed,” says economist William Emmons of the St. Louis Federal Reserve.

There are three related shifts causing economists to re-examine the returns of college. First, the wages of college graduates have remained mostly flat this century, after inflation. Second, the cost of attending college has soared. Third, even with higher salaries, significant numbers of college graduates in recent years are failing to build the kind of wealth that previous generations did."

"The share of Americans between ages 25 and 29 with a bachelor’s degree rose to 37% last year from 29% in 2000"

"College and graduate-school tuition has risen at triple the rate of inflation this century"

"Americans with a bachelor’s degree—but not a graduate degree—earned an average $77,239, nearly $32,000 more than the average earnings of workers with only a high-school diploma"

"That premium remains near an all-time high, after inflation."

"After the tech bust of the early 2000s, the economy demanded less of the type of cognitive skills that college graduates typically have"

"As a result, college graduates started taking up jobs previously held by those who went only to high school, pushing down wages for high-school graduates. College grads thus maintained an earnings advantage over nongrads, but their real wages didn’t rise."

"roughly four in 10 recent college graduates—those between ages 22 and 27—are in jobs that typically don’t require a degree."

"during the recession, as unemployment soared, employers increasingly required bachelor’s degrees for jobs that previously required only a high-school education."

"Research published in 2014 by the New York Fed shows that among college graduates, the bottom 25% of earners made roughly the same or less than the typical high-school graduate without a degree."

"according to a St. Louis Fed paper released in January . . . “Among families born in the 1980s, the college wealth premium weakens to the point of statistical insignificance with the single exception of white bachelor’s-degree holders, which remains positive but much smaller than that enjoyed by previous cohorts.”"

Here are some earlier posts on related topics:

Many college dropouts are worse off economically than if they hadn’t started college

Maybe That College Degree Is Not As Valuable As You Thought

As college costs rise, sticker shock eased by student aid

Does It Pay To Go To College?

Who Is Most Likely To Default On Their Student Loans?

Student loan delinquency is higher than for other borrowing

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

Student-Debt Forgiveness Is a Wonderful Boon, Until the IRS Comes Calling: Education analysts, student advocates warn of impending crisis from one-time tax bills individuals may not be prepared to pay off

The Diminishing Returns of a College Degree

For Some Grads, College Isn't Worth Debt

Is It Getting Too Expensive To Go College?

Is the U.S. student loan system broken?

Is College Still A Good Investment?

Why do employers pay extra money to people who study a bunch of subjects in college that they don’t actually need you to know? Signaling