A college degree is still the best bet as grads break even in 10 years
- Jaison R. Abel and Richard Dietz of the New York Federal Reserve Bank studied data on graduate earnings beginning in 1970
- A bachelor's degree is a $300,000 value over a high school degree
- College graduates now earn back the cost of their degree in around 10 years compared to more than 20 years in 1980
- A fifth year in college can cost almost $80,000 in lost wages, two extra costs around $144,000
- Engineering degrees have the best return on investment, education the worst
Despite student loan debt hitting $1trillion this decade, going to college is still the smart thing to do, as the average student makes back the cost of their degree in 10 years, says the New York Fed.
Jaison R. Abel and Richard Dietz, economists at the New York Federal Reserve Bank, looked at data on college graduates and found steady growth in earnings over the last few decades.
The average value of earning a bachelor's degree instead of only graduating high school has been hovering 'near its all-time high of about $300,000' for around a decade, according to a blog posted on the New York Fed's site Tuesday.
Higher ed: Researchers at the New York Federal Reserve found that college graduates earn $300,000 more than high school graduates over their lifetime
Abel and Dietz looked at data going back to 1970 for the study, which was originally published in June.
The record earnings took student loan debt into account on the balance, though the researchers acknowledge they did not count jobless or part-time workers with college degrees.
Graduates weather bad economies better than the rest, but college graduates experienced their worst unemployment rates in decades during 2010 according to NPR.
What's encouraging for students with five- or six-figure debts are findings that a college degree pays off twice as fast as it used to.
Back in 1980, it took more than 20 years for a graduate to break even on a college degree. Now the average is around 10.
This is in spite of the fact that tuition nearly sextupled from 1985 to 2011 as the New York Times reported.
Payoff: Abel and Dietz found that the time it took for a college degree to pay for itself dropped significantly over the past few decades
College students shouldn't take this as a chance to slack. In a follow-up, Abel and Dietz explained that in addition to paying tuition, those who take an extra year to complete their bachelor's degree lose out on $37,000 in wages and earn $41,000 less over their lifetime. Students who spend a sixth year can kiss $144,000 goodbye.
The returns on investment for a bachelor's degree are also not evenly distributed across every field of study. Unsurprisingly, graduates with engineering or math and computer science degrees experienced the highest rates of return.
The lowest was education, where the average graduate's income amounted to nine percent return, only slightly better than investing those tuition dollars into the stock market.
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