Fresh look: Is college worth the price?

New Fed study raises some red flags

Everybody knows that folks with college degrees outearn those without them, right?

In fact, a recent study by St. Louis Fed researchers confirms that college graduates earn nearly twice as much as their peers without a college degree.


But, the Fed researchers found that the degree-earners’ earnings aren’t translating at historic rates to higher wealth …


Here’s the key chart from the Fed study:


Note that college grads’ median net worth today is about $100k less than it was in 2007 … a 33% drop.

What’s up with that?

First, college-degreed folks’ median household earnings dropped about 5% over the nearly 10 year period.

In addition, many of the degreed folks got banged during the financial crisis when house values (a main component of net worth) fell precipitously.

Oh yeah, and don’t forget about higher tuitions and ballooning student loan debt.

The grads net worth is now starting out at a lower point (often negative) making it harder for the miracle of compounding to work its magic.

Still, the economic premiums for degree-holders over non-degree-holders remains pretty robust.

Bottom line: a college degree is still worth it.


Follow on Twitter @KenHoma

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