In the United States, the college experience typically begins with an acceptance letter. And around four years later, for seniors like Reaz Khan who told us his story in the accompanying video, it ends with a very different type of mail...bills from student loan issuers.
Related: Are Millennials a “Lost Generation”?
Sixty percent of of college graduates are like Reaz and go into debt paying for college tuition. They borrow over $27,000 on average, according to student loan expert Mark Kantrowitz. The Consumer Financial Protection Bureau found that amounts to a trillion dollars outstanding nationally.
This has some wondering if a college education is even worth it? MIT economist Michael Greenstone has studied this. In the accompanying video he gives some insight into why he says the answer is yes.
Here are some hard facts. The longer you stay in school, the more likely it is you’ll have a job. The unemployment rate for college graduates with a bachelor’s degree or higher is about half the rate for those with only high school diplomas, according to the Bureau of Labor Statistics. The BLS also finds individuals with a post-graduate degree are even more likely to be employed.
Not only are college grads more likely to have a job, but they’re more likely to have a better paying job. According to The Hamilton Project, over a lifetime, the wage gap between the average high school and 4-year college graduate is more than a half a million dollars.
But wait, there is more. Greenstone also says you will live longer, are more likely to get married and raise children in a two-parent family.
And, he says that the return on a college investment is twice that of other common investments. According to the Brookings Institute, "on average, the benefits of a four-year college degree are equivalent to an investment that returns 15.2 percent per year. This is more than double the average return to stock market investments since 1950, and more than five times the returns to corporate bonds, gold, long-term government bonds, or home ownership."
But Greenstone shares some insight into why you may still want to assess college as an investment, and consider the return when you choose a college, major, and the amount of debt you can handle to take out.
The Daily Ticker Presents: Generation I.O.U.
Yahoo! Finance, Yahoo! News and The Daily Ticker are teaming up to produce a special live streaming event on May 23 at 12:30 pm ET around the rising cost of college.
Are you burdened by student loan debt? Have you moved back home? Are you having trouble finding a job?
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