When College Might Not Be Worth It
libertystreeteconomics.newyorkfed.org
libertystreeteconomics.newyorkfed.org
I lived with my parents and went to the local college because I didn’t have big ambitions.
The course gave everyone work placement with most people keeping the job after the course, starting at €28,000 - €35,000 salary on average.
My following job 4 years later paid €70,000 and then 2 years later €80,000.
At age 28 I am €35,000 above the median Salary of the country which is around €44,000.
The ROI has been massive on that €12,000 spent on college.
edit: I additionally have many friends who came from family’s where their parents / siblings were not working and sitting on welfare. through free college via grants, these friends became the first in their families to get degrees and subsequently are earning well over €60,000+ on average. I would also like to highlight that some of these people even only got a very low passing grade and weren’t prodigies by any means of the word.
I had no hopes nor expectations as to how my degree would end up being of benefit. It allowed me to see another part of the world, and "learn how to learn" so to speak.
I ended up doing another course in computing at the same time, which I had to pay for myself, using any and all free time I had during the college course, paid for by a shitty call center job I managed to get which paid, at the time, about EUR 3,60 / hour.
Later on, I went from approx. 1000 EUR / month in my first professional gig as a Java dev, to doubling that in the same establishment by getting promoted.
Then I got hired by a fortune 500 and left my country of origin (not Ireland) which paid....so much more. Then founding a startup, and now...
My conclusion is that the learning-to-learn aspect of it is of utmost importance. I think college is great for learning how to learn, even more than the content of what it happens to be that one is pursuing.
That's a great deal. My local university costs $10k per semester.
If you can afford college, it is absolutely worth it to go to college. For a variety of reasons, ROI not top of the list.
If it may be hard for you to afford college, then it's a better question to ask.
Making college less necessary starts with improving primary and secondary education.
Are you saying Americans don’t take stats, calc, or English lit in high school?
Public school in Hawaiʻi man.
This is complicated by the fact that the mission of the university and of education in general has become muddled. There is also an intellectual crisis that plagues academe (like the silos separating the liberal arts and the sciences). The two intertwined and at times competing missions are that of educating the person and that of career preparation. Arguably, the latter is where the bulk of energy is going; I don't know where you can locate the former, in general.
So, in that light, you have to ask: are universities the best option for everyone...
a) from the perspective of job training?
b) from the perspective of education?
Not everyone is called to go to university.
2. As someone trying to finish the PhD, there is zero ROI, due to closeness to retirement. If genuine intellectual curiosity were not the driver, it would truly be a waste of time.
It's a great segue into real/high-value commercial endeavors if you're lucky. For others not so fortunate, they graduate into a Starbucks barista role.
I'm just a lowly keymasher, but I have a college classmate who is a US Senator. Do I envy him? Why, no; no, I do not.
Does this job have compensation/benefits equal to being a lowly keymasher?
But that is a different question than the one of shame.
Barista itself is probably not a full career path, but there is nothing wrong with it as a waypoint.
So yeah, I can see how someone would feel shame in that even if they didn't publicly admit it. An interesting question for you from here is, what do you think about the people who are in "nothing wrong with it as a waypoint" jobs?
What else are they doing? Do they have goals? Are they socially connected and building up those around them?
You might see someone, for example, busking on the corner and jump to a wildly erroneous conclusion about them... https://x.com/bluezharp/status/1822666701814608086
You're not engaging with the real and acute problem of, 1) keypusher gets to look at barista and say "oof, no medical insurance, no investments, living paycheck to paycheck" must be their waypoint, hopefully at 10 years deep into that barista career they get their break as a senior ruby engineer, good thing they were "just at a waypoint"
2). > What else are they doing? Do they have goals? Are they socially connected and building up those around them?
Are they healthy? Have they been able to maintain the same level of fitness as someone who works 4 hours a week writing internal tooling vs dodging traffic and dealing with an equally financially unstable manager screwing their ability to pay rent the next week?
Really smitty
By what rule am I engaging? It sounds as though there is a hierarchy on offer here, based upon salary/benefits, no?
The point I'm after here is that, while salary/benefits are a relatively straightforward metric, they are not the only metric.
Do we have rules of thumb by which we come to an initial evaluation of situations? Of course we do. But let us leave a little wiggle room and not close the case until the whole situation is understood, say I.
Really, avicebron.
https://libertystreeteconomics.newyorkfed.org/2025/04/is-col...
Doesn't that mean over the working life of the person (40 years), they spend (1-0.13) * 40 = 34.8yrs paying for the cost of college from their additional earnings?
I think my college was paid for with additional earnings inside of 5 years.
And then compute the interest / investment gains on those earnings.
So if you make 100 without college, you’d have made 113 with it.
And I don’t know if loan repayments are factored in.
It could be that college educated individuals wind up with 13% more wealth than similarly situated non-degreed individuals
The total investment is 4 years of tuition + 4 years of opportunity cost.
The total return is your salary till age 65 - salary of someone without a degree.
Subtract 1 from 2, annualize it.
"Indeed, by comparison, the stock market has provided a long-term return of about 8 percent and bonds have returned around 4 percent."
Yeah, that's BS.
Right off the bat, I'm seeing different numbers[1] for median earnings elsewhere: $60K for college graduates vs. $36K for high-school diploma holders.
I have no idea where they got the $47K wage for high-school graduates from, and it's a substantial difference.
Because the difference between being able to make ends meet, and not being able to make ends meet isn't quantifiable in terms of ROI. Not having to worry about your card bouncing at the grocery store is a step-function-like quality of life increase alone.
What's the ROI of decreased risk of depression and suicide? [2]
Or living 7 years longer, as the article we're discussing acknowledges.
Then, the devil is in the details. Wages of someone with only a high school diploma and 20 years of experience today might be acceptable, but that's because they were able to get into the field with only a high school diploma 20 years back.
The job landscape right now is different, and will be different still 20 years into the future. We all know that a factory worker in the 1950s could get by just fine with only a HS diploma, but lumping their end-of-career earnings with those of a fresh high-school grad entering a dead-end job makes for bad analysis.
Yet this study attempts no such distinction.
Then, there's looking at the toll jobs available to HS diploma folks take on them. With social security and retirement potentially not being an option anymore, that's probably the most important factor to look at today.
I can go on and on; the point is, ROI calculation could make sense, but it is awfully incomplete in studies like this.
And that's ignoring the elephant in the room, which is that colleges are not merely trade schools. College education develops the mind, introduces people to different perspectives and backgrounds - and, on average, creates more informed voters with better critical thinking skills and more ability to resist Russian-style firehose-of-falsehood propaganda.[3]
There is no cure to that, aside from teaching critical thinking (according to the same RAND study) - which Finland has started doing a decade ago, starting from elementary school[4].
That kind of thing is one of a million reasons of why college education (beyond being a trade school with an ROI) is important for the society as a whole.
That, and probably the fact that even if a plumber makes the same as a college-level mathematics instructor, we shouldn't be pushing potential mathematicians to become plumbers for a better ROI.
Just a thought.
[1] https://www.aplu.org/our-work/4-policy-and-advocacy/publicuv...
And since having a degree guaranteees absolutely nothing, doubly so.
They’ll never have lower expenses and a greater tolerance for not having money than at ages 18-22.
They’ll never be in closer contact with such large numbers of people their age with the same level of freedom.
I get not spending insane money to go to college but 4 years at an in-state school with reasonable tuition can be a very fun time that you really only get the chance to do once.
I wouldn’t go into debt $100k to do it, but $30k-50k doesn’t seem like an outrageous number for how much fun it can be.
I guess what I'm saying is, if they had a 'college' which only had dorms, cafes, interest clubs, and various paths of casual, part-time study which gave no grades and automatically conferred a 'participation certificate' after 4 years, and cost half as much, I'd tell my kids to go there.
I got an English degree from University of Florida and that is basically what you are describing lol.
You could at least try to engage with what the article actually says.
I think much 'higher education' is an inflated scam partially for being able to discriminate against black people, and they not as able to afford high education costs.
I still think apprentice work, but under multiple people with mastery, is the most effective. But only the trades see that as true.
So very many students I knew when at University were surviving entirely off loans/debt, instead of having a job. That's one of the easiest ways for people to rack up 5-6 figures of "student" debt... even though a non-trivial amount was spent on Chipotle and Blaze Pizza... along with expensive apartments or dorms (all expenses the individual would incur regardless if they were a student or not).
Many people believe University (and therefore a degree) is an automatic door to a high paying job - yet fail to realize what your field of study is matters a lot. We almost shouldn't even offer student loans for anything outside of STEM, but even within STEM your job prospects are largely up to the individual.
University largely doesn't teach you how to do a job... it teaches you how to think. You spend a lot of time in your field of study thinking deeply about issues, ideas, past works, etc. None of which prepares you for your first day in the office.
University (and the college experience in general) is meaningful and powerful. I recommend it - but not with debt. Get a full-time job, and work your way through your degree program. It will take much longer to get your degree, but you will be a much more complete adult at the end, filled with equal parts life-experience and domain knowledge.
Is there evidence for this?
I'm pretty sure people already know how to think. And IIRC tests of critical thinking (not subject specific) to college seniors and freshmen there's not convincing evidence that college really does that much. https://opportunityamericaonline.org/wp-content/uploads/2017... - also 4 years of anything tends to make an 18-22 year old a bit older and wiser.
A meta argument - colleges are at least halfway competent at assessing critical thinking, and if they were good at improving critical thinking then you'd expect to hear from the unis that can prove they did a good job, and you'd get more than just a slogan. Playing League of Legends also has a bit of face validity to any claim that it improves teamwork, problem solving, decision making under pressure, etc.
Being forced to take subjects you have no interest in, and to do well you must think about them deeply. This expands your mind, and teaches you how to approach things you find boring, have little interest in, and/or don't want to do. Someone is there to hold you accountable for your learning, knowledge and work - all things you must learn to rationalize and do on your own.
Many like to say "when am I ever going to use X?", failing to understand not all of the value is in that particular subject - instead it's the complete experience.
On reflection, I found some of my most mundane classes to be the most impactful on my life, such as Film Appreciation or Theory of Criminality. These challenged my beliefs and assumptions, expanded my thoughts, and forced me to communicate (vocally and in writing) why I held them. Instead of just "knowing" something, I was challenged to think about and understand why.
You will be a better human being, after surviving the experience. You will be more capable of adaptation, reasoning, critical thinking, personal discipline and more.
None of this are things you can't learn on your own, or experience somewhere else. But University is a really great way.
It requires you to do the bare minimum memorization to pass the test. Deep thinking not included. Also you have 13 years experience f Doing this already by the time you start college.
The next best, and completely legal requirement was a 'college degree'. What college? We don't care. What degree? Again, we dont care.
Its a bar that less black people pass than white people. So completely legal discrimination, but on its face is completely equal.
I was sold a lemon. At least vehicles have a lemon law. Education has nothing such, and worse yet, has protections against things like even bankruptcy.
Edit: For those of you who -1ed this, I would love any sort of citable proof that university has a demonstrable anything positive. As far as I've seen, I've had to teach myself all the monetizable skills. All I have from what Uni classes I took is a big bill and absolutely no positive things.
You also admitted that your wage is such that paying off the tuition was trivial. That makes it seem like a good deal, not a bad one. Even if you're strictly criticizing knowledge-transfer, most people would disagree and find some value in the format.
Plus all colleges have very stringent prerequisites rules and tons of BS classes one has to take. Some colleges have independent studies, which are much better, but you still have to go through the prerequisites gate and other annoyances, plus it's still expensive.
But I'd argue that colleges are purporting to sell 'knowledge and skills' -- at a markup somewhere between hilarious and absurd. Knowledge and skills are absolutely free for the taking now. Academia has zero claim to them.
There are more insightful lectures on YouTube in ANY subject area than you'll hear in 99% of college classrooms. Libraries full of books anyone can read on any subject. And for someone who wants those ideas organized into a course of study, you can just download a syllabus for a college class, even buy all the textbooks, and pay a couple thousand a year, compared to the $20,000+ the average college tries to charge. For a customized and up-to-date syllabus, ask an AI to update an old one with the latest concepts and discoveries.
So why should they charge us so much? The answer is that they are not actually selling knowledge or skills. They're just gatekeeping access to be elite, and they can't make it truly affordable because then it would lose even more of its original value. Even now, just "a college degree" barely even grants any elite status, only the Ivys and certain respected schools in niches (e.g. UCLA for film school) confer any status. For everyone else, it may get your foot in a door somewhere, serving basically just as a vague proof that you have enough perseverance to complete one annoying, long-term slog, but that door is not a door that guarantees you any prosperity anyway.
Some of the main benefits of institutionalized education are social. It's more acceptable to go to a college instead of spending a few years self-studying. And if you are not exceptionally motivated, the institutional pressure probably makes you study more than you would do on your own.
And some fields are easier to study on your own than others. One common pitfall of studying on your own is that you may learn the content without understanding it in the right context. Each field has its own ways of thinking, its own implicit assumptions, its own approaches to things, and so on. Theoretical frameworks, if you like big pretentious words. Those things are difficult to learn without people who are already familiar with the field. Software engineering is probably one of the easiest fields for self-study, as a lot of activity happens in public in open source projects. Computer science is already much harder.
Agreed. Would you say that sitting in a lecture hall with 300 other people, receiving a boring lecture from a grad student, does a good job of imparting this deep understanding?
It seems to me that there are a few dozen people in any given field who have truly meaningful insights to impart. Maybe a tenth of those people are college professors, and some fraction of those bother to teach students, preferring to do research and publish papers to accrue additional clout in the Academia Game.
So most college students are actually taught by grad students or Lecturers/adjuncts with mediocre levels of "familiar with the field" knowledge. The ones who were lucky enough to be taught directly by the real experts probably get their money's worth. I don't think most do.
I'd rather that the few experts who truly do want to teach students, were hired with tax dollars to create content for study at free virtual universities, and do away with the facsimilies of 'expert instruction' being sold to most students today for $20k+ a year.
During my undergrad, in a European public university poorly funded by American standards, seminar classes were the key for actually understanding the field. Students would read papers and other primary sources, give presentations and write papers based on them, and discuss what the others had done. The person in charge would usually be either an active researcher or a senior professor who had been active in the past.
I could have learned many of the subjects on my own.
Would I have? That is a better question.
I seriously doubt I would have.
Academics aside, I had some good, bad, and ugly times while in college. It has been about a decade out and think that period of my life nearly every day. I learned a lot of lessons that videos cannot convey and had experiences that cannot capture. I met the love of my life there -- in a computer ethics class.
Not saying college isnt worth it, but knowledge and skills can be much more easily obtained via MOOCs, digital learning platforms, reading, etc. I know not everyone has the focus to do so, but that is usually because they do not look at the sheer cost of the alternative. A good way to frame the decision is -- "if you cannot learn some of this via MOOCs/Udemy/Udacity/Coursera, are you willing to pay $80k for someone to help you focus on doing it?"
Separate from this is experience, relationships, teamworks, practicals/labs, etc which I think college is much better at than MOOCs/Udemy/Udacity/Coursera.
I honestly wish I could have done a year or two of MOOCs/Udemy/Udacity/Coursera inbetween college so I could focus even more on experience, relationships, teamworks, practicals/labs when actually in college.
> "if you cannot learn some of this via MOOCs/Udemy/Udacity/Coursera, are you willing to pay $80k for someone to help you focus on doing it?"
Let me tell you, when you know that the only way to pay back that 80k is with your hard earned money or your life, then the motivation is a lot easier to muster. My loans were not even half that amount, and that was still enough to put the fear of God in me.
The reason why I am getting a degree in computer engineering is because I need it to get a job, because a degree is supposed to filter out people who don't understand how to write code at any level. I'm essentially paying for someone to grade my tests and assignments. Honestly, I think most of my courses are too easy and I'm not getting good value on the filtering side.
Most of the lecture materials I pay for are plagiarized from open courses. Sometimes I find the original course. Typically my professor refactors stuff to make it less clear or add false information.
If I was at a top-tier university, I might be getting knowledge I couldn't get elsewhere. But at my school the professors pretend to teach and the students pretend to learn.
And as the article points out, the time itself is what dominates the total cost--not tuition.
ever considered something like WGU if that's the case? Cheap, can be finished as fast as you want, and would likely get you past HR screening at the rate of a mid-tier uni
College is largely for certification and connections IMO. Both are basically just financial concerns.
> If it doesn't make us money it's not worth it?
By definition, that makes it a luxury.
Feels like we're one year away from totally undetectable AI images, and just after that for video.
There may be a role here for AI if it can create relevant pictures, but AI was used to generate generic stock photography in this case.
I've also attended community college, a prestigious college (Tulane) and Berea College. Their courses are essentially the same, but different costs. People are a little smarter, so the standard for homework is a bit higher at Tulane. Honestly it's not worth to get debt for a brand name that most employers don't care about these days.
While our present system is what it is, and educates a lot of people, the same can be said for our health care system. But both are these opaque public-private enterprises that cost twice or more as in other civilized countries, for no reason that anybody can discern.
I've long believed that our best bet towards reforming higher education is to support and strengthen the public institutions that are doing a lot of good for a lot of people.
In my father's (Boomer) generation, you could incredibly easily see the net effect that college vs. no college had on career potential and thus earnings, and as a result I was coached to aim exclusively for college.
If I'm being honest I gained two main things from those four years:
1. I personally enjoyed a few fascinating or culturally uplifting classes, most of which were outside my major
2. By luck, I happened to meet someone in a class (which was an overall graduation requirement for the College of Business), who connected me to my first tech-related job.
Thankfully my school was cheap and I only graduated with about $40k in debt. But if I'd spent those 4 years living at home and teaching myself to code, I'd have been far ahead in my skills. To the extent anyone refused to hire a "non-college educated" software engineer, it would have been their loss, because it contributed nothing to my skills.
I will not be suggesting to my kids that they target "college," unless they have a very specific career goal and are confident on the job prospects and the median earnings being sufficient to pay back the loans and still be a net positive. There are just too many of the 'requires college' careers now that used to be somewhat viable and now are a dead-end joke, such as teaching, journalism, etc. Including software development, probably, for Gen Alpha, since nobody wants to hire juniors anymore, for rational reasons.
This point is the best so far -- from my standpoint in technology, the market for entry-level has almost completely disappeared. When speaking with my kids, I dont know how I could propose over-leveraging for college any longer in any field where there isnt forced scarcity or licenses or some other protection mechanism for entry-level workers looking to go up the ladder.
I don't know which outcome I'd hate more:
• It turns out that AI has hit a ceiling and in 20 years when I retire there will be no one left to do the complex work that senior engineers do today because we shut out a whole generation of engineers, or
• AI continues to advance and no humans are even involved in software in 20 years
I must say my intent was only to show that college can offer things that the internet can't.
While I don't have a degree myself (I am too old by now), I do see value in younger people getting one.
Also, the classmates on the internet are mostly clowns and gamblers.
You can certainly argue that this is a dumb requirement - but regardless of "ROI", if you want job X, you need to get a degree (for many X).
It is very obvious that everyone doesn't choose their career path to maximize income.
Of course, maybe that is changing rapidly. Tech seems to be ahead on this since there are more direct ways to prove your ability.
One of my Mom's friends told me back then companies were desperate to hire anyone with a college degree.
Also, gives a breakdown per field. It really tells you something when a fine arts degree has a better return then education. (Edit: missed this: "Returns are especially low for education majors, though it should be noted that annual wages for this group typically reflect teacher salaries for a nine-month school year.")
https://www.newyorkfed.org/medialibrary/media/research/curre...
So, as a layman who does not work for the NY fed, I thought it was a good analysis ;) that is, right up until the final number crunching where there appears to be some mathematical sleight of hand.
Essentially, their ROI is a comparison of wages with and without a degree, but the opportunity cost only counts earned wages and conspicuously omits investing those wages as part of the calculation. The sleight of hand is they make a point to compare ROI of education to the stock market _after the fact_ rather than baking it into the initial formula. Equally problematic is the complete omission of student loans which has the same effect.
To be charitable, hand-waving rates makes sense in the world of ROI - 12% with a late start will eventually overtake 7% with a head start, and is therefore numerically superior. But the paper repeatedly emphasizes its own caveat, that their analysis is "all based on historical trends, which are no guarantee of future patterns." It's precisely because of current trends - the rising student debt, soaring tuition, and the growing chasm between graduation and securing your first job - that this "late start" really needs further attention.
Where is it headed, and what's the tipping point? Maybe it's still valuable if you're graduating today, but what about 4 years from now?
Back to the methodology - the scenario explores averages, but should be one of ideal financial decision making, so someone with only a high school degree has an automatic 4 year head start earning AND investing money, but those that pursue a degree are set back by debt AND negative interest rates. The question is: how big is the gap and how long does it take to catch up? This is a function of tuition, interest, wages, job opportunities, and cost of living. Again, there's no arguing with ROI, but the living reality that this data reflects is a delayed start in life at best, and a marginally positive ROI on education at worst.
The paper mentions another significant caveat challenging its own fundamental assumption: education is an investment and not a filter. I'm not aware of any analysis comparing outcomes based on socioeconomic background, but we can assume the high academic achievers would still do well financially if they didn't go to college. But there a very real and growing cohort of individuals experiencing negative ROI, where debt exceed earnings. The best data I could find on this is from 2016, we're overdue for an update.
https://www.brookings.edu/articles/the-relationship-between-...
Yet there are further confounding factors - not at all mentioned is how the modern job market is dependent on educational attainment. Employers have entirely deferred training to colleges, and the vast majority of high earning jobs today (even beyond white collar roles - ex. running a daycare) have a hard requirement of higher education. With the exception of the recent, short-lived, learn2code/bootcamp trend, there is very little latitude for non-degree holders.
In summary, there's a worrying shift in the function of modern education. It all started as a common, shared dream to give young people a better chance in life. Gradually it became an economic investment to secure better employment, then it turned into training for jobs that no longer provide such resources. Today its used to filter out those found unqualified, and at worst is a form of gatekeeping, excluding those considered unworthy. Education has become a monolith and a monopoly that controls the "all day access pass" to the labor market. ROI is a diversion, the fact is its the only game in town. "Go to college and do well, or perish."
I would like to see the fine folks at the NY Fed follow up and try to compute these extra scenarios. Don't average the outcome like you're making a sales pitch. Give us a multi-dimensional breakdown like an economist - or else us unwashed, unqualified, uneducated folks will start doing our own sloppy math and running amok, giving people wrong ideas and ultimately mislead them into bad financial decisions, that other predatory institutions run by educated folks can profit off of. (What's the ROI on that outcome?)