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Report: College grads play financial catch-up until age 33

At a Capitol Hill briefing yesterday, the College Board Advocacy & Policy Center released its third "Education Pays" report, aimed at countering the idea (that seems to be growing) that a college education isn't as valuable as it once was. We explored that idea in our October 2009 cover story, Is a College Education Still Worth the Investment?

The new College Board report (in PDF here) offers "detailed evidence of the private and public benefits of higher education, including the impact on health, family and community, in addition to the financial returns," according to a College Board news release.

USA Today's education reporter Mary Beth Marklein has a summary:

For the typical student attending a four-year public university, the financial investment in college begins to pay off at about age 33, [the College Board] report says....

Compared with a high school graduate, the typical four-year college graduate who enrolled in a public university at age 18 has earned enough by then to compensate for being out of the labor force for four years and for borrowing enough to pay tuition and fees without grant aid....

"Questions have intensified about whether going to college is worthwhile," says [the report]. "For the typical student, the investment pays off very well over the course of a lifetime — even considering the expense."

Pay parity at age 33 is roughly unchanged from the data (shown in the graph below) that we used for our October 2009 story.

One way of thinking about this is that, generally speaking, the first decade after college is no financial picnic for college graduates. And, of course, those 10 years tend to be the time when college grads are making the transition into the workplace, getting married, and starting to raise children. (In many cases, a grad with a heavy school-debt load marries another grad with a heavy school-debt load, increasing the financial pressure.)

Seeking to highlight the upside of a college education, the report notes (as summarized by reporter Marklein) that recent "unemployment rates have increased faster among people with a high school diploma but no college degree" and that "college grads are more likely to exercise, volunteer, vote and read to their kids, and are less likely to be obese or smoke."

Of course, in weighing such findings, one runs into the problem of a "selection bias" that can lead to questionable conclusions about cause and effect. For example, it may be that people who are the sort to volunteer may already be the sort more likely to attend college. In other words, the two things (college and volunteering, in this case) are not necessarily linked in a cause/effect relationship.

The same could be said on the earnings side: is it that a college education itself leads to higher earnings, or is it that people who are likely to do well in the marketplace are more apt to go to college?

These matters aren't necessarily "either/or," of course. Surely, many people do become more valuable in the marketplace because of their educational attainment. But, as the report notes, a significant percentage of those who attain a college education do not find greater prosperity: about one fifth of male four-year college graduates earned less than $39,000, the median earnings of high school graduates.

The report concludes that the solution to the college-or-not quandary "is not to advise students to forgo college" but to "provide better information and advice — and more generous financial support."

I'm not too sure about that last point. Maybe a better approach would be for the price to come down.

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